China’s economy is likely to recover in the second quarter, according to a private survey of more than 4,600 respondents conducted by China Beige Book from mid-April 2023 to mid-April 2023.
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China’s service sector activity grew at the slowest rate in five months in June, a private sector survey showed on Wednesday, as weak demand weighed on the post-epidemic recovery.
The Caixin/S&P Global Services Purchasing Managers’ Index (PMI) fell to 53.9 in June from 57.1 in May, the lowest reading since Covid-19 swept the country in January after authorities abandoned anti-virus measures. A score of 50 is the dividing line between expansion and contraction in economic activity.
The data roughly tracks the government’s Official Purchasing Managers Index Data released last week showed activity in the service sector slowed as demand for field services weakened.
The world’s second-largest economy lost momentum in the April-June period amid rising deflation, high youth unemployment and weak foreign demand after growing faster than expected in the first quarter.
The Caixin PMI showed that the growth rate of business activity and new orders last month was significantly lower than that in May. The growth rate of new export business has also slowed down, but it still maintains rapid growth.
Service firms said input costs rose sharply at the end of the second quarter, with inflation little changed from May, while prices charged by service providers edged up in June.
Surprisingly, business optimism about the 12-month outlook increased, with firms anticipating stronger economic conditions and an increase in new jobs to support growth.
Job creation in the services sector also edged up to a three-month high, but remained modest overall. About half of China’s employed people work in this industry.
Caixin/S&P Composite PMI, which includes manufacturing The services sector activity index fell to 52.5 from 55.6 in May, marking the sixth straight month of expansion.
“Manufacturing employment has shrunk, deflationary pressures have mounted, and optimism has waned,” said Wang Zhe, senior economist at Caixin Institute. “Meanwhile, the service sector continued to rebound after the epidemic, but the recovery is losing steam.”
As the second half of the year begins, there is more evidence that the economy will see a double-dip, Lu Ting, chief China economist at Nomura Securities, said in a note on Monday.
China is due to release second-quarter GDP data and an indicator of economic activity for June in mid-July.