Data released by Caixin showed that activity in China's services sector expanded again in April (for the 16th month in a row), but the pace of expansion slowed slightly compared to March, confirming economists' forecasts. Meanwhile, business sentiment improved to the highest level since last December, bolstering hopes of a sustained economic recovery.
According to the report, the services PMI fell to 52.5 points from 52.7 points in March. A value above 50 points indicates an expansion of activity in the sector.
Caixin said that the volume of new work also expanded for the 16th month in a row. Moreover, the pace of growth was the fastest since May 2023. Meanwhile, new export orders rose at the fastest pace in 10 months. Work outstanding was little changed in April, while employment in the service sector declined again (for the 3rd month in a row). Panelists reported that job shedding reflected a mixture of resignations and redundancies. As for the inflationary situation, the growth of average input costs accelerated slightly compared to March against the background of higher input material, labor, and energy costs, but remained below its long-run survey average. In contrast, output price inflation, though mild, rose further above the series average as firms sought to share rising cost burdens with clients.
The data also showed that the composite PMI - which measures changes in activity in the manufacturing and services sectors - rose to 52.8 from 52.7 in March, to indicate a sustained expansion of overall business activity for the sixth consecutive month and at the fastest pace since May 2023.