China Service Sector Activity Rebounds In July

chinapmi jun05 04aug21 lt

China's service sector activity logged a steeper growth in July as the successful containment of the recent uptick in COVID-19 cases led to greater customer numbers and boosted new order intakes, survey results from IHS Markit showed on Wednesday.

At 54.9 in July, the Caixin Purchasing Managers' Index rebounded from June's 14-month low of 50.3 and signaled a sharp and accelerated expansion of services activity.

New order growth accelerated in July as the containment of the virus domestically boosted customer numbers and demand. Nonetheless, new export business remained broadly stagnant.

Although marginal, service sector employment returned to growth in July.

On the price front, the survey showed that the rate of input cost inflation accelerated in the latest survey period. Consequently, prices charged by services companies increased, as firms looked to alleviate pressure on their operating margins.

Business confidence regarding the one-year outlook for activity improved in July, picking up from June's nine-month low.

In July, the composite output index came in at 53.1, up from a 14-month low of 50.6 in June, to point to a stronger rise in overall Chinese business activity.

The resurgence of the epidemic in some parts of China at the end of July is expected to hurt August's PMI readings, Wang Zhe, a senior economist at Caixin Insight Group said.

China's official second-quarter economic figures were in line with expectations, but the Caixin China PMIs in July suggest that the economic recovery is not on sure footing, Wang added. "The economy still faces enormous downward pressure, and we need to ensure business owners remain confident."

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