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China’s Services Sector Returns to Growth, but Risks Still Remain

Economic IndicatorsOct 08, 2021 05:56
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© Reuters.

By Gina Lee

Investing.com – China’s services sector made a return to growth in September as a major COVID-19 outbreak in the eastern province of Jiangsu was brought under control. Although providing support to a stalled economic recovery, the risk remains that more COVID-19 outbreaks could hamper the recovery again.

The Caixin services purchasing managers index (PMI), released earlier in the day, was 53.4 in September, compared to the previous month’s 46.7 figure. The Caixin survey, which focuses on the private sector, also rose above the 50-mark indicating growth and away from more-than-one-year lows.

The non-manufacturing PMI, released by the National Bureau of Statistics at the end of September, was at 53.2.

The services sector has been slower to recover from COVID-19 compared to the manufacturing sector. It is also more susceptible to shocks from COVID-19 outbreaks, which impact consumption and travel, and the outlook for a rebound remains uncertain.

"In view of this, in the coming months, the government should focus on improving epidemic prevention and control and alleviating supply-side pressure," Caixin Insight Group senior economist Wang Zhe told Reuters.

"It should also find a balance among multiple objectives, such as promoting employment, holding raw material prices stable, ensuring a stable and orderly supply, and meeting targets for controlling energy consumption."

Input prices increased for the 15th consecutive month in September and also increased at a faster pace. RIising labor, freight, and raw material costs, which drove factory activity into contraction last month, contributed to these increases, according to the Caixin survey.

China’s Services Sector Returns to Growth, but Risks Still Remain
 

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