By Zhang Mengying
Investing.com – China’s services activity grew at the fastest pace in almost a year in June as COVID-19 curbs eased and demand revived.
China Caixin services purchasing managers index (PMI) rose to 54.5 in June from 41.4 in May, the fastest growth since last July and the first expansion since February. The forecasts prepared by Investing.com predicted a reading of 49.7.
The 50-point mark separates growth from contraction on a monthly basis.
Caixin’s findings are in line with official data that showed the services industry staged the fastest rebound in 13 months. Sectors that were hit hard by COVID-19 curbs such as retail and road transportation started to rebound.
However, the second-largest economy is still facing headwinds such as a subdued property market, soft consumer spending, and fear of any recurring waves of infections.
Employment continued to decline in June for the sixth straight month, with services firms linking it to cost-cutting initiatives and resignations amid COVID.
“Overall, regional COVID outbreaks were put under control, and restrictions were loosened in June, facilitating a gradual recovery in business operations,” said Wang Zhe, Senior Economist at Caixin Insight Group.
“Deteriorating household income and expectations caused by a weak labor market dampened the demand recovery. Correspondingly, supportive policies should target employees, gig workers, and low-income groups impacted by the outbreaks.”
Analysts expect further economic improvement in the third quarter, although they think it is hard to achieve the official GDP target of around 5.5% for this year.