China services sector grows more than expected - Caixin

Activity in China’s services sector picked up more than expected in February amid a recovery in demand, according to a survey released on Friday.

The Caixin services purchasing managers' index rose to 55.0 from 52.9 in January. This was above consensus expectations for a reading of 54.5 and comfortably above the 50.0 mark that separates contraction from expansion.

Wang Zhe, senior economist at Caixin Insight Group, said: "There was still a lot of optimism in the services sector in February as business owners continued to express great confidence in an economic recovery upon the easing of Covid controls."

Duncan Wrigley, chief China+ economist at Pantheon Macroeconomics, said the data confirms the picture of a "vigorous, early-stage recovery" in China.

"The withdrawal of zero-Covid policy has led to a surge in business activity and less disruption to operations. The strong reading for business activity is comparable to previous highs in mid-2022, mid-2021 and late 2020, as the economy reopened after Covid outbreaks were contained," he said.

"This time, however, services firms are ebullient about the outlook and hiring workers. The future activity index was a stratospheric 67.1 in February, albeit down 1.5 points from January, but that was the highest reading in over a decade. Policymakers will be pleased that employment jumped 3.9 points to 53.2 in February, as a stronger jobs market is key to the sustainability of the rebound."