Chinese Services Sector Progressing At Sustained Pace
According to a private poll, Chinese services sector expanded at a sustained pace in May with boosted hiring in companies. The optimism for future growth reached the highest level in 11 months. Still, new orders growth has slowed down and pricing power softened as well.
The Caixin/Markit services PMI (purchasing managers' index) remained flat at 52.9, mildly lower than in 2017. The new business sub-index in PMI dropped from 53.0 to 52.5 in May. Input prices grew at a slightly faster pace. Firms reported that increased costs were due to rising wages and transportation-related costs. Caixin's composite PMI stayed at 52.3, indicating a steady growth.
Zhengsheng Zhong (director of macroeconomic analysis at CEBM Group) stated: “The index of expectations regarding future output rose to a relatively high level, suggesting optimism across both the manufacturing and service sectors". He added: "However, the impact of the recent credit contraction on small businesses is worthy of attention."