Oct 08, 2021 09:45 AM

Caixin Services PMI Rebounds as Covid Outbreaks Fade

Activity in China’s services sector returned to expansion in September thanks to the fading impact of Covid-19, a Caixin-sponsored survey showed, as new business and employment picked up.

The Caixin China General Services Business Activity Index, which gives an independent snapshot of operating conditions in the sector, rose to 53.4 in September from 46.7 the previous month, according to the survey report released Friday. A number above 50 indicates an expansion in activity, while a figure below that points to a contraction.


The indicator, also known as the Caixin services PMI, is closely watched by investors as one of the earliest available monthly barometers of the health of the world’s second-largest economy. The growth in the Caixin services PMI accompanied a pickup in manufacturing activity seen in the Caixin China manufacturing PMI for September, released on Sept. 30, rising to 50 from 49.2 the previous month.

The Caixin China General Composite PMI, which covers both manufacturing and services sectors, rose to 51.4 in September from 47.2 the previous month, according to the Friday survey report.

“The Covid-19 flare-ups in East China's Jiangsu province, which had largely impacted services previously, was contained, contributing to the expansion of activity in the services sector,” said Wang Zhe, a senior economist at Caixin Insight Group.

“Overall, because the impact of the pandemic was less severe in September than in the previous month, services quickly rebounded,” he said. “By contrast, recovery in the manufacturing sector was limited, showing the economy still faced downward pressure.”

The breakdown of the September Caixin services PMI survey showed that the gauge of total new business bounced back into positive territory in September from the previous month. Surveyed enterprises attributed the growth to firmer market conditions and higher customer demand. However, the gauge for new export business fell into negative territory in September, due to the epidemic overseas, Wang said.

As both market demand and supply in the services sector recovered, employment returned to expansion in September after recording a contraction the previous month. Outstanding business further grew in September, though at a milder pace than in August.

Input prices of services enterprises rose for the 15th straight month in September and at a faster pace than the previous month, indicating continued inflationary pressure. That was because of rising labor, freight and raw material costs, said Wang. He said the rising cost pressure was partly transmitted downstream to consumers as demand was not weak, with the gauge of prices charged returning to positive territory.

Service companies remained upbeat about the business outlook, with the measure of business expectations rising further into positive territory in September, though it remained below its long-term average.

Economists at Nomura International (Hong Kong) Ltd. expected that Beijing’s “zero-case” Covid strategy could delay a full recovery of services consumption in the medium term, according to a research note released last month.

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“In the coming months, the government should focus on improving epidemic prevention and control and alleviating supply-side pressure,” said Wang. He also suggested the Chinese government should find a balance among multiple objectives, such as promoting employment, holding raw material prices stable, ensuring stable and orderly supply, and meeting targets for controlling energy consumption.

China’s official services PMI, released by the National Bureau of Statistics on Sept. 30, rose to 52.4 (link in Chinese) in September from 45.2 the previous month.

Contact reporter Tang Ziyi ( and editor Heather Mowbray (

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