China’s services activity expanded at a quicker pace in November, a private-sector survey showed on Tuesday, as the upturn in new businesses were the best seen for three months amid reports of firmer market conditions.
“Both services supply and demand expanded, as the market continued to heal,” said Wang Zhe, economist at Caixin Insight Group.
Analysts say the different survey sizes and composition of surveyed companies might explain the discrepancy between the Caixin and official PMI readings.
Caixin/S&P’s composite PMI, which includes both manufacturing and services activity, grew to 51.6 from 50 in October, marking the strongest reading since August.
Service providers were upbeat about business activity over the year ahead in November and the degree of positive sentiment picked up for the first time in five months.
However, Oxford Economics lead economist Louise Loo said while China heads into 2024 with relatively loose policy settings, the country’s private sector confidence was constrained by property pessimism.
China is no longer the spender of last resort for the global economy, so don’t expect robust reflation
Property sales, investment, and home prices extended declines in October and piled more pressure on authorities to step up efforts to prevent contagion across the broader financial sector.
The country’s central bank governor last week said monetary policy would remain accommodative to support growth, but urged structural reforms over time to reduce the economy’s reliance on infrastructure and property.
According to the Caixin services survey, employment fell for the first time since the start of 2023 as some firms maintained a cautious approach to hiring.
November also witnessed a further slowdown in the rate of input cost inflation across China’s service sector.
“China is no longer the spender of last resort for the global economy, so don’t expect robust reflation,” Oxford Economics’ Loo said.