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China services sector continues to expand in February

By Michele Maatouk

Date: Wednesday 05 Mar 2025

China services sector continues to expand in February

(Sharecast News) - Activity in China's services sector continued to expand in February, signalling a sustained recovery, according to a survey released on Wednesday.
The Caixin/S&P Global services purchasing managers' index rose to 51.4 from 51.0 in January, coming in above the 50.0 mark that separates contraction from expansion for 26 months in a row. It was above analysts' expectations for a reading of 50.8.

The survey found that February's expansion was driven by a combination of higher sales, the start-up of new projects and promotional work.

Firms reported an improvement in general market demand and heightened success in converting this into actual new contract wins. Foreign sales also rose since January, with growth of new export business solid and its highest in three months.

Wang Zhe, senior economist at Caixin Insight Group, said: "Both supply and demand grew. Amid an improving economic environment, service providers continued to roll out new products and ramp up their promotional efforts. The gauges for business activity and total new orders remained above 50 for the 26th straight month, both edging up from January. External demand improved, as the gauge for new export orders hit a three-month high while staying in expansionary territory.

"Employment remained largely stable. While rising demand boosted hiring at some firms, many others remained cautious. In February, the employment gauge moved into positive territory but only marginally. A slight increase in hiring, coupled with ongoing efficiency improvements, led to a modest reduction in backlogs.

"Price pressures persisted. Amid a decline in the cost of some raw materials, input costs fell for the first time since June 2020, though the drop was minimal. This encouraged service providers to cut their prices to stimulate demand, resulting in a slight decline in output prices.

"Market sentiment continued to improve. The indicator for future activity expectations rose for the second consecutive month, staying in expansionary territory. Service firms were generally optimistic about the economic outlook for the coming year and planned to take more aggressive measures to boost sales."

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