China services sector hires workers as recovery continues
By Sean Farrell
Date: Thursday 03 Sep 2020
(Sharecast News) - Chinese services companies hired more workers for the first time in seven months as the sector continued to recover from the Covid-19 outbreak, a survey showed.
The Caixin/Markit purchasing managers' index was little changed at 54.0 in August from 54.1 a month earlier marking four months of expansion. A score of 50 separates contraction and expansion.
New orders increased, fuelled by domestic demand, though the gain was the weakest for four months. The upturn was still enough to prompt services businesses, which make up about 60% of China's economy, to recruit extra workers - the first increase since January when the Covid-19 crisis gripped China.
Wang Zhe, senior economist at Caixin Insight Group, said: "The ongoing recovery of supply and demand in the services sector had a positive influence on employment, with the employment gauge rising into expansionary territory ... In the face of increasing orders, many companies expanded hiring."
New export orders contracted but at a slower pace as overseas markets picked up from Covid-19 lockdowns. Operating expenses increased as labour costs and raw materials prices rose.
Services companies were generally optimistic about business over the next 12 months but positive sentiment dipped to a thee-month low. The survey weakened from a 10-year high in June but economists said that was to be expected after an initial sharp rebound.
The services survey adds to a pickup in factory activity to suggest the recovery in the world's second-biggest economy is solidifying after Covid-19 shut down almost all economic activity.
"This is the clearest sign to date that China's services sector is now on more stable ground following the massive damage caused by Covid-19," Miguel Chango, senior Asia economist at Pantheon Macroeconomics, said. "The PMI data for the third quarter, so far, indicate that the broader economic recovery remains on track, though with the catch-up in services doing more of the heavy lifting this time around."
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