A particular indicator of China’s service sector activity hit a three-month high in March as coronavirus flare-ups in winter subsided.
Caixin Media Co. and research firm Markit said on Tuesday that the Caixin China Services purchasing managers index rose to 54.3 from 51.5, the lowest level in February. The index stood above the 50 mark that separates expansion from contraction, pointing out that supply and demand in the services sector continues to increase.
Total new orders grew at the fastest pace in three months, driven by strong domestic demand. Meanwhile, as the epidemic continues to put pressure on new overseas orders, the sub-index of new export orders remained in the contraction zone for a second month.
Caixin said the employment sub-index rose in March and returned to the expansion zone after the contraction in February thanks to capacity expansion and order processing efforts.
Amidst the hopes of recovery from the pandemic, Caixin said confidence in the business world has been at the highest level for more than a decade.
“Covid-19 exacerbations that occurred during the fall and winter months have fundamentally decreased, and the services sector has recovered rapidly, with supply and demand expanding,” said Wang Zhe, a senior economist at Caixin Insight Group.
China’s official non-manufacturing purchasing managers index, a competing indicator, showed even stronger results last week. According to the National Bureau of Statistics, the index rose from 51.4 to 56.3 in March.
Caixin PMI gravitates towards smaller companies that tend to be more volatile. The official indicator is intended for large companies and state-owned enterprises.