The Caixin services purchasing managers index rose to 54.1 in July, indicating a further rebound in China's services sector. This growth comes after a slight dip to 53.9 in June, which was the lowest level in five months, according to Caixin Media Co. and S&P Global.
For seven consecutive months, the index has remained above the crucial 50 mark, which signifies expansion rather than contraction. Although the gauges for business activity and new business have consistently stayed above 50, the growth in external demand has slowed down significantly. The reading for new export business was just slightly higher than 50, as reported by Caixin.
While surveyed companies acknowledged the uncertain economic outlook overseas, employment in the services sector continued to expand. The subindex, which tracks employment, has remained above 50 for six consecutive months, reflecting strong market supply and demand, as stated by Caixin.
Wang Zhe, a senior economist at Caixin Insight Group, emphasized that service providers are generally optimistic about the market outlook for the coming year. However, they expressed concerns about the sustainability of global economic growth. Wang added that the reading for future activity expectations in July was more than 3.0 points lower than the historical average.
In contrast to the positive numbers in the Caixin survey, official data revealed a decline in China's official nonmanufacturing PMI, which encompasses both service and construction activity. The PMI dropped from 53.2 in June to 51.5 in July. Similarly, the subindex tracking service activity fell from 52.8 in June to 51.5 in July.
Overall, these indicators suggest that China's services sector is on the path to recovery; however, uncertainties in the global economic landscape persist.