Wasn’t the Chinese economy supposed to be slowing?
You could have fooled us. After Monday’s report that the manufacturing sector was stable, a private survey on Wednesday said China’s services sector accelerated in May as new business rose at the fastest pace in three years.
The HSBC China Services Business Activity Index posted 53.5 in May up from 52.9 in April, the 13th successive month of expansion for the sector. Anything above the 50-point level represents expansion.
The service sector helped the HSBC China Composite PMI, which covers both manufacturing and services, stay steady while manufacturing production contracted for the first time in five months. The HSBC Composite inched down to 51.2 in May from 51.3 the previous month.
Adding to the positive news, employment at services firms grew at the fastest rate since January 2013. That’s especially good to hear as the manufacturing sector lost jobs for the 19th consecutive month, although at the slowest rate since February.
On Monday, the official manufacturing state PMI edged up to 50.2 from April’s 50.1, the National Bureau of Statistics (NBS) said, matching analysts’ forecasts. It was a six-month high in China’s giant factory sector.
Of course, this hasn’t stopped economists from holding a negative view of China’s economy.
“Overall, growth momentum appears relatively weak, weighed down by an ongoing deterioration in manufacturing operating conditions,” Annabel Fiddes, economist at Markit wrote in the report. “Therefore, further stimulus measures may be required to keep up with (the government’s) annual GDP growth target of 7%.”
The report said confidence towards service sector activity growth prospects remained strong in May.