Employment Shrinks Due to Chunje Holiday Effects
Chinese financial information provider Caixin announced on the 5th that the Caixin Services Purchasing Managers' Index (PMI) recorded 51.0 in January.
This figure is 1.2 points lower than the previous month (52.2), still indicating expansion but marking the lowest level since October 2024. It also fell significantly short of the Bloomberg-surveyed expert forecast of 52.4.
This index, compiled by Caixin based on surveys of purchasing managers in service companies, indicates economic expansion when above 50 and contraction when below 50.
The PMI statistics, based on surveys of purchasing managers in service companies, serve as indicators of economic trends. A reading above the baseline of 50 indicates economic expansion, while below 50 indicates economic contraction.
The Caixin Manufacturing PMI for January, released the previous day, recorded 50.1, down 0.4 points from the previous month, marking the lowest level in about four months.
As the business environment deteriorated in both the service and manufacturing sectors, the Caixin Composite PMI fell 0.3 points from the previous month to 51.1.
According to recent data released by the National Bureau of Statistics of China, the January Services PMI recorded 50.3, down 1.7% from the previous month.
According to Caixin, the growth rate of new business recorded its lowest level in four months. Employment in the service sector contracted for the second consecutive month, with the January employment index falling to its lowest level since May 2024.
The contraction in employment is believed to be due to the earlier-than-usual start of the Chunje (春節, Chinese New Year) holiday. Some restaurants and other businesses close during the long holiday and send workers back to their hometowns.
Wang Jeo, Chief Economist at the Caixin Think Tank, stated, "With increasing uncertainty in overseas policies, the export environment may deteriorate somewhat. This will be a major challenge facing the Chinese economy. Macroeconomic policies must be adequately prepared for this and adjusted in a timely manner according to objective changes in the situation."
Hwang Ji-chun, Economist at Capital Economics, evaluated, "The Caixin Services and Composite PMIs released today further clearly show evidence that the Chinese economy lost momentum last month."
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