FX.co ★ China Service Sector Growth Moderates In April

Data released by S&P Global on Monday showed that China's service sector experienced ongoing expansion in April, although this growth was at a slightly reduced rate. The Caixin services Purchasing Managers' Index (PMI) dropped marginally from 52.7 in March to 52.5 in April. This index signifies sector growth with any score above 50.0.

The official PMI data also revealed a similar trend of moderated growth in the private sector during April. The manufacturing PMI fell from 50.8 (March) to 50.4 (April), while the non-manufacturing PMI recorded a sharper decrease, shifting from 53.0 (March) to 51.2 (April).

Despite the marginal slowdown, the service sector marked 16 consecutive months of expansion, according to the S&P Global data. This sustained growth was primarily driven by remarkable expansion in new business opportunities, with the rate of growth in new work reaching its peak since May 2023.

Additionally, foreign demand experienced a significant surge in April, recording the fastest growth pace over the past ten months. Better external market conditions and a boost in tourism activity were the key factors supporting this upwards trend.

Conversely, there was minimal change in work backlog, leading to job cuts. The decline in jobs resulted from a combination of employee resignations and layoffs.

Moreover, business confidence among service providers reached its highest level since last December, fostering optimism for improved market conditions in the upcoming year.

Inflation of average input costs in the service sector persisted in April, rising slightly due to input material, labor, and energy expenses. Concurrently, firms escalated output price inflation to offset the increased cost burdens by passing them onto their clients.

The survey also indicated that overall private sector activity in April experienced the most expansion since last May. The service sector outperformed manufacturing in April, with the composite output index increasing slightly to 52.8 compared to 52.7 in March.