An independent measure of Growth in China's services sector rebounded last month from a near 12-month low, narrowing the gap with official measures and widening the gap with the performance of the country's manufacturing sector.
The Caixin-Markit services purchasing managers’ index came in at 52.8 in May, up from 51.5 in April and further above to the 50-point mark separating growth from contraction.
The rise ended a four-month streak of weakening growth and tightened the Caixin gauge’s spread with an official services PMI sub-index produced by China’s statistics bureau to 0.7, from 1.1 in April.
That was in contrast to Caixin’s manufacturing PMI released this week, which fell into contractionary territory with a reading of 49.6. The Caixin gauges focus primarily on smaller and private firms, while those from the National Bureau of Statistics primarily track larger, state-owned enterprises.
The independent services gauge rose in April to the strongest level since January thanks to a second straight uptick in new orders, though staff numbers rose at the slowest pace so far for the current nine-month streak of growth. That pushed work backlogs up after a marginal fall in April.
Output costs rose again for a fourteenth month running while input costs likewise grew on the back of more expensive raw materials and higher staff wages.
Together the services and manufacturing readings brought Caixin’s composite index for business activity in China to 51.5 in May, up slightly from a ten-month low of 51.2 in April.