Investing.com-- China’s service sector grew past expectations in December, a private survey showed on Thursday, as continued stimulus measures helped push up local demand, while a rout in overseas orders also eased.
The Caixin Services purchasing managers index (PMI) grew 52.9 in December, handily beating expectations of 51.6 and accelerating from the 51.5 seen in the prior month.
The reading marked a somewhat positive end to the year for China’s service sector, which has so far managed to duck a contraction seen in manufacturing activity. Caixin analysts said that companies in the service sector reported better market conditions and a sustained improvement in business conditions- which pushed up employment and inflation.
Service sector firms also turned more positive over their prospects in 2024, the Caixin survey showed.
Chinese consumer spending appeared to be recovering in recent months, with local media reports stating that travel during the 2024 new year holiday blew past pre-COVID levels.
But Caixin analysts noted that growth in the service sector still remained tenuous, with foreign orders only growing at a marginal pace through December. Sales prices also remained weak amid high levels of domestic competition.
The Caixin data contrasts an official reading on non-manufacturing activity released earlier this week, which showed the sector inching closer towards contraction in December.
But the Caixin survey also differs from the official reading in its scope of businesses covered- wherein it focuses more on smaller, private enterprises, as opposed to the bigger, state-run enterprises covered by the official survey. Investors use both surveys to get a broader picture of the Chinese economy.
China’s manufacturing sector- which accounts for a bigger portion of the economy than services- still remained in contraction in December according to official data. While the Caixin manufacturing PMI showed a second straight month of growth, analysts noted that the sector remained vulnerable.
A post-COVID Chinese economic recovery largely failed to materialize in 2023, drawing increased calls from investors for more stimulus measures from Beijing.
While the Chinese government has steadily injected liquidity into the economy, it has maintained a largely conservative approach towards fiscal stimulus, which investors argue is needed to boost economic growth.