China’s services activity picks up as conditions improve, Caixin PMI shows

BEIJING (Reuters) – China’s services activity expanded at the fastest pace in three months in October, helped by early signs that Beijing’s big stimulus push was helping improve business conditions, a private-sector survey showed on Tuesday.

The Caixin/S&P Global services purchasing managers’ index (PMI) grew to 52.0 in October from 50.3 the previous month. The 50-mark separates expansion from contraction on a monthly basis.

That matched the official PMI released last week, which showed non-manufacturing activity including services and construction broke back into expansion.

China’s economy grew at the slowest pace since early 2023 in the third quarter, with the crisis-hit property sector showing few signs of steadying as Beijing races to reach its growth target of this year.

Beijing unleashed monetary stimulus and property sector support measures in September. Soon after, a meeting of top Communist Party leaders, the Politburo, vowed the “necessary spending” to bring growth back on track.

The survey showed new business increased marginally to 52.1 from 51.0 in September. However, expansion of new business inflows from abroad slipped.

Capacity pressures were seen as new business added to the backlog of work. As a result, service providers raised their employment for a second consecutive month.

Input price growth slowed to a three-month low, though companies are still grappling with rising material and energy costs.

Overall confidence rose to the highest in five months with some firms increasing promotional efforts to support sales growth in the year ahead.

Together with the manufacturing PMI, the Caixin/S&P Global Composite PMI rose to 51.9 from 50.3 in September.

Recent figures pointed to increased deflationary pressures, softer export growth and subdued loan demand, red flags for an economic recovery.

“Achieving China’s 2024 growth target will depend on a sustained recovery in consumer demand. That means policy efforts should focus on increasing household disposable income,” said Wang Zhe, Senior Economist at Caixin Insight Group.

(Reporting by Liangping Gao and Ryan Woo; Editing by Sam Holmes)