Data released by Caixin/S&P Global showed that activity growth in China's services sector accelerated last month, reaching its highest level since July 2023, helped by an increase in new orders.
The services PMI rose to 54.0 points in May from 52.5 points in April. Economists had expected the index to rise to 52.6 points. A value above 50 points indicates an expansion of activity in the sector.
According to the report, in May, the volume of new orders increased at the fastest pace since May 2023. Export orders, meanwhile, also recorded the strongest growth in a year. Anecdotal evidence pointed to improvements in domestic and external market conditions, alongside the launch of new products as factors helping to drive the rise in new work. As a result, staffing levels expanded for the first time in four months. The rate of employment growth was the fastest since September 2023. As for the inflationary situation, average purchase prices rose again in May, and accelerated to the highest level in 11 months. The rising costs of raw materials, labor and transport were mainly mentioned by respondents as factors of rising resource prices. Meanwhile, selling prices rose at the fastest pace since January 2022. The data also showed that sentiment in the services sector remained positive in May. However, confidence fell to a seven-month low amid growing concerns about the global economic outlook and inflation.