China Caixin services PMI rises in December but remains in contraction
Activity in China’s services sector improved in December, but remained in contraction territory.
The Caixin services purchasing managers’ index rose to 48.0 from 46.7 in November, coming in ahead of consensus expectations for a reading of 46.8. Still, it remained below the 50.0 mark that separates contraction from expansion.
New orders increased 0.7 points to 47.9, while new export orders fell 2.0 points to 48.2.
Caixin Insight Group’s senior economist, Wang Zhe, said: "Optimism improved significantly" and that "service providers expressed strong confidence in an economic recovery following the easing of Covid containment measures".
Duncan Wrigley, chief China+ economist at Pantheon Macroeconomics, noted that the headline Caixin services index came in at a level well above the lows of 36.2 in April 2022 and 26.5 in February 2020.
"We find this unbelievable given the deluge of Covid cases was mounting in December, leading people to stay at home and wait for the wave to subside," he said.
"The official services PMI tells a fair more credible story, plunging 5.7 points to 39.4 in December, below 40.0 in April 2022 and above the all-time low of 30.1 in February 2020. The Caixin survey has a smaller sample of companies, and is likely representing the situation in a few regions or sectors rather than the broad situation in the official index."