A Caixin survey released on Friday showed that Chinese services sector activity rose sharply in February as the removal of most Covid-19 pandemic restrictions allowed the Chinese economic recovery to pick up speed.
According to the report, the purchasing managers index (PMI) measuring services sector activity, rose to 55 points in February, compared with a January reading of 52.9. It was the fastest rate of growth in seven months. A measure of 50 represents neither growth nor contraction, while any measure above 50 indicates growth, and any measure below 50 indicates contraction.
The survey primarily sampled smaller, private companies, which benefited from the easing of Covid restrictions. The benefits were also shown to be growing as time went on, with the demand for services improving throughout the reporting month, with increasing customer numbers and export orders. Data even showed that new export order growth rose to the highest level seen in nearly four years. Service companies also enjoyed the fastest growth in new business since April of 2021.
Wang Zhe, Senior Economist at Caixin, said in a note, “The economy has entered a post-Covid recovery, with services activity showing signs of a stronger recovery than the manufacturing sector. There was still a lot of optimism in the services sector in February as business owners continued to express great confidence in an economic recovery upon the easing of Covid-19 controls… the impact of the pandemic remains far-reaching” and suggested that in the near term the government should focus on policies that would “increase household income and improve market expectations.”
The Caixin numbers reinforce stronger-than-expected government data which was released earlier in the week, showing the composite PMI, including manufacturing services and construction sectors activity, rose to 56.4 points in February, compared to 52.9 in January.
Analysts see the new data as a sure sign that China’s economy is in a solid recovery after three years of pandemic lockdowns and economic stagnation.
