Last month, China's private service sector indicators improved, soaring to the highest level in five months.
On the 4th, Chinese economic media Caixin reported that the Caixin Services Purchasing Managers' Index (PMI) for December last year recorded 52.9. This is not only a 1.4-point increase from the previous month (51.5) but also exceeded the forecast (51.6). It is also the highest level in five months since July last year (54.1).
The Services PMI is a key leading indicator for assessing the real economy; a reading above the baseline of 50 indicates economic expansion, while below 50 indicates contraction. From January last year (52.9) for one year, this index consistently stayed above the baseline, showing an expansion trend. The previously released Caixin China Manufacturing PMI for December rose by 0.1 points from the previous month to 50.8, marking two consecutive months of expansion.
Accordingly, the composite PMI index rose from 51.6 in the previous month to 52.6 in December, showing the highest level in six months since June last year. However, the official manufacturing and services PMI released by the National Bureau of Statistics recorded 49.0 and 50.4 respectively in December, showing somewhat sluggish performance. The official PMI calculated by the National Bureau of Statistics focuses on large state-owned enterprises, whereas Caixin's PMI includes export companies and small and medium-sized enterprises, making it more comprehensive.
The new orders index, a component of the Caixin Services PMI released that day, recorded the highest level in six months. Surveyed companies responded that "both the number of customers and customer spending increased," Caixin explained. The new export orders index increased to the highest level in the second half of the year, and the employment index showed an upward trend for the first time in three months.
Wang Zhe, Chief Economist at Caixin Think Tank, stated, "It is important to note that domestic and foreign demand is still insufficient and the foundation for economic recovery is still needed," adding, "It is necessary to strengthen employment stability policies to ease market pressures, effectively improve people's livelihoods, and cultivate long-term confidence among market participants."
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