China’s Service Sector Logs Robust Growth In October
China’s service sector expanded strongly in October signaling a sustained recovery from the Covid-19 related drops in activity seen earlier in the year, survey results published by IHS Markit showed Wednesday.
The Caixin services Purchasing Managers’ Index advanced to 56.8 in October from 54.8 in the previous month. A score above 50 indicates expansion in the sector.
The sector posted its second fastest growth for over a decade, driven by a substantial rise in new work. However, new work from overseas markets declined further due to the resurgence of Covid-19 cases across a number of export markets.
Increased amounts of new work and signs of firmer market conditions led companies to add to their payroll numbers for the third straight month in October.
Due to higher staff numbers and purchasing costs, operating expenses increased at the steepest rate for just over two years. However, efforts to remain competitive led firms to raise their output prices only slightly.
There was a marked improvement in business confidence in October. The degree of optimism was the strongest since April 2012.
The survey showed that the composite output index that combines the performance of manufacturing and services, rose to 55.7 from 54.5 in September, signaling a sharp and accelerated rise in overall business activity across China.
Overall, as the domestic epidemic situation stabilizes, recovery remained the main economic theme, Wang Zhe, senior economist at Caixin Insight Group said.
In the coming months, a continued recovery of the Chinese economy is highly likely, but it is necessary to be cautious about the normalization of monetary and fiscal policies in the post-epidemic period, the economist said.
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