Data in May showed that China’s service industry continued to maintain a strong momentum, with 13 consecutive months of expansion. The growth rate of operating activities and new orders slowed down but remained significant.
Data released on June 3 showed that China’s Caixin service industry PMI was 55.1 in May, up from the previous value of 56.3. China’s May Caixin Composite PMI was 53.8, up from 54.7 previously.
The previously announced May Caixin Manufacturing PMI rose to 52, the highest value since 2021. However, the acceleration of manufacturing PMI expansion was not as fast as the decline in service PMI growth, leading to a 0.9 percentage point drop in Caixin China’s comprehensive PMI to 53.8 in May.
The trend of Caixin China’s service industry PMI is consistent with that of the Bureau of Statistics. The Service Industry Business Activity Index previously announced by the Bureau of Statistics in May dropped slightly by 0.1 percentage point to 54.3, and the comprehensive PMI rose 0.4 percentage point to 54.2.
In May, Caixin China’s General Service Industry Operational Activity Index (Service Industry PMI) recorded 55.1, which was down from the April high of 56.3, but still exceeded 50.0. The service industry is still expanding, which has continued for 13 consecutive months. The expansion rate has slowed down slightly from last month, and it is still in the high boom range. The factor supporting the expansion of business activities in May is continued sales growth. The survey sample companies reported that China has successfully contained the epidemic, and customer demand has continued to recover; at the same time, some companies mentioned that the advent of new products has boosted sales.
Although the growth momentum of operating activities and new orders has slowed down from April, the absolute growth rate still remains at a significant level, and companies have also increased their employment.
Employment in the service industry continued to improve, market supply and demand were booming, and employment increased steadily. In May, the service industry employment index fell slightly from the previous month, but was still above the line of prosperity and decline. The index has continued to expand in nine of the past ten months. Employment in the service industry has continued to be repaired in the post-epidemic era.
The service industry has continued to expand for the third consecutive month, and many companies have increased their employment due to sales growth. But at the same time, the backlog of work has also rebounded. Enterprises generally report that the increase in new orders has also brought pressure on production capacity. Although the work backlog rate for the month was small, it was already the most significant in a year.
Service cost pressures have also continued to intensify. Raw materials and energy costs have all increased, with a significant increase, which is higher than the highest record held in November last year.
Regarding the business prospects of the next year, although the overall confidence of the company has slightly dropped to the lowest in four months, it still remains strongly optimistic. In May, the service industry business expectation index was significantly higher than the prosperity and decline line. The confidence of the industry is generally related to the expected strengthening of domestic and overseas demand and the release of new products.
According to Wang Zhe, senior economist at Caixin Think Tank, the expansion potential of manufacturing and service industries remained strong in May. Both sides of market supply and demand expanded simultaneously. External demand was generally good. The job market continued to improve. Entrepreneurs were optimistic about the prospects of the service industry. attitude. Inflation is still the focus of attention. In May, the cost-end and toll-end price indices of the manufacturing and service industries all rose. The State Council executive meeting in May mentioned the issue of commodity price increases twice. On the one hand, the downward transmission effect of prices has appeared. Inflationary pressure will restrict the monetary policy space and is not conducive to economic recovery. On the other hand, faced with rising raw material prices, Some companies have begun to stock up, and some companies are facing the dilemma of shortage of raw materials, and the supply chain has also been significantly affected.