China: Employment rising as service sector recovers at a faster pace

The Caixin China General Services Business Activity Index, better known as the services PMI and which provides an independent view of operating conditions in the services sector, rose to its highest level of 56.8 since June from 54.8 in September. A number above 50 shows an expansion in activity, while a figure below that indicates a contraction, said a Caixin survey.  

The services sector, accounting for about 60% of the economy and half of urban jobs, had initially been slower to return to growth than the manufacturing sector, but its recovery has in recent months gathered pace, according to Reuters. 

The main driver of the recovery has been domestic demand. On the other hand, new export business accepted by Chinese service companies slipped into contraction in October, at its fastest rate since July. 

In terms of jobs, companies hired more for three consecutive months, signaling a stronger recovery in the labour market badly affected by COVID-19 since the start of this year. 

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Companies in the service sector were optimistic about the recovery, with the sub-index for confidence for the year hitting its highest level since 2012. 

“In the coming months, a continued recovery of the Chinese economy is highly likely, but it is necessary to be cautious about the normalisation of monetary and fiscal policies in the post-epidemic period,” said Wang Zhe, senior economist at Caixin Insight Group, in comments released alongside the survey.