China services gauge fares better than forecast despite slip

[MANILA] China’s services activity eased less than expected in June, a private survey showed, adding to signs that the country’s economic momentum is picking up.

Research firm RatingDog’s China services purchasing managers’ index (PMI) came in at 54.1, moderating from 54.4 in May, when it was buoyed by holiday spending.

It exceeded the median estimate of 53 in a Bloomberg survey of economists to remain well above the 50 mark separating expansion from contraction.

“The services sector maintained a solid expansion in June,” Yao Yu, founder of RatingDog, said in the statement.

“The marked acceleration in new export business, sustained employment growth and the return of selling prices to expansion territory all point to strengthening endogenous growth drivers and improving external demand.”

The better-than-expected print suggested that the world’s second-largest economy ended last quarter with both manufacturing and services sectors on the upswing, increasing the prospects of a broad-based recovery as disruptions from the Iran war wane.

Factory activity has shown signs of stronger momentum earlier.

Still, the data may be coming too late to avert a slowdown in the second quarter, after retail sales and investment slumped to levels unseen since the pandemic.

The latest results echo the performance of the official survey, which showed service business activities expanded for a second month, with the sector’s PMI reaching a 10-month high in June. 

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Household spending on services, such as travel and entertainment, has tended to be stronger than retail sales of goods, especially as the government scaled back its subsidies for consumers. China’s services production index inched up to 4.4 per cent on year in May. BLOOMBERG