By Gina Lee
Investing.com – China returned from a week-long holiday with a bang, with the services sector remaining positive for a fifth consecutive month in September, helped by continuous recovery from the impact of COVID-19 in domestic supply and demand.
The Caixin Services Purchasing Managers Index (PMI), released earlier in the day, rose to 54.8 in September, against August’s reading of 54. The Composite PMI for September, however, fell to 54.5 from the previous month’s 55.1 figure.
Both indexes stayed above the 50-mark indicating growth, but the sector recorded the sharpest rate of expansion in three months, with the rate among the quickest recorded over the past decade.
“The services sector’s post-epidemic recovery showed signs of speeding up … domestic supply and demand in the services sector continued to recover at a faster pace, while overseas demand remained subdued. Both the business activity index and total new business expanded for the fifth straight month, and at a faster pace than the previous month, causing the gauge for outstanding business to break back into expansionary territory,” Caixin Insight Group senior economist Wang Zhe said.
“Companies remained confident about the economic outlook. In September, the gauge for business expectations rose further into expansionary territory. Companies remained positive about the ongoing economic recovery and the effective control of the epidemic,” he added.
However, employment remains a roadblock in the Chinese path to recovery. The rate of job creation remained marginal overall, despite firms expanding workforce number for the second month in a row in the wake of the sustained economic recovery.
With COVID-19 numbers continuing to rise globally and dampening overseas demand, new export businesses remained has remained in contractionary territory for seven of the past eight months.
“In the near term, there will still be uncertainties from COVID-19 overseas and the U.S. election, and the development of ‘dual circulation’ in the domestic and international markets will continue to face challenges,” warned Wang.
The services PMI corroborated the official manufacturing and no-manufacturing indices, as well as the previous week's Caixin manufacturing PMI, which remained firmly in the growth zone for the seventh consecutive month.
The manufacturing PMI and the non-manufacturing PMI remained above the 50-mark, with readings of 51.5 and 55.9 respectively. The Caixin manufacturing PMI, released on the same day, fell slightly to 53 in September from August’s 53.1 figure, but remained above the 50-mark.