China’s Sept services activity returns to growth – Caixin PMI

10:47 pm Thursday, October 07th, 2021

BEIJING (Reuters) – Activity in China’s services sector returned to growth in September as a major COVID-19 outbreak in the eastern province of Jiangsu receded, a private-sector survey showed on Friday, offering some support to a slowing economy.

The Caixin/Markit services Purchasing Managers’ Index (PMI) rose to 53.4 from 46.7 in August, pulling away from the lowest level seen since the height of the pandemic last year. The 50-point mark separates growth from contraction on a monthly basis.

The better readings in the survey, which focuses more on smaller firms in coastal regions, are in line with findings in an official survey last week which also showed the services industry returned to activity growth.

Analysts say the services sector, which was slower to recover from the pandemic than manufacturing, is more vulnerable to sporadic COVID-19 outbreaks in the country, clouding the outlook for the much anticipated rebound in consumption in the months to come.

“In view of this, in the coming months, the government should focus on improving epidemic prevention and control and alleviating supply-side pressure,” said Wang Zhe, senior economist at Caixin Insight Group.

“It should also find a balance among multiple objectives, such as promoting employment, holding raw material prices stable, ensuring a stable and orderly supply, and meeting targets for controlling energy consumption.”

Sub-indexes of new business, prices charged, and employment all bounced back to expansionary territory in September, although new export business shrank again, touching the lowest in seven months due to the surging pandemic overseas.

Input prices increased for the 15th straight month in September and rose at a faster pace, driven by rising labour, freight and raw material costs, the survey found, an issue that drove factory activity into contraction last month.

Caixin’s September composite PMI, which includes bothmanufacturing and services activity, rose to 51.4 in September from 47.2 the previous month, buoyed by strength in the services sector.

(Reporting by Stella Qiu and Ryan Woo; Editing by Sam Holmes)