In May, Caixin China'S Service Industry PMI Rose Sharply To 55.

With the relaxation of the new crown epidemic prevention and control measures, China's service industry in May improved significantly.

In June 3rd, Caixin's general service industry activity index (PMI) in May was 55, an increase of 10.6 percentage points over April, and the first expansion since February, the highest since November 2010.

Previously announced in May, Caixin China manufacturing PMI increased 1.3 percentage points to 50.7, and returned to the expansion section. The two industries, PMI, both picked up, leading to a 6.9 percentage point rise to 54.5 in May, which is the first expansion since February, and the highest since February 2011 in May.

The trend of service industry and comprehensive PMI in Caixin China is not exactly the same as that of Statistics Bureau. In May, the Statistics Bureau released the business activity index of service industry in May, which rose 52.3 percentage points, 0.2 percentage points, and the comprehensive PMI was flat at 53.4.

In May, the new orders index of service industries returned to the expansion area since February, mainly driven by the pick-up in domestic demand, the highest since October 2010, while the new export orders index has slowed down, but is still in the contraction zone. Due to the weakness of external demand, the new orders index of manufacturing industry has only picked up slightly in the contraction range. On the whole, the total volume of new orders has increased for the first time since February, and the total volume of new export orders has narrowed.

Affected by overcapacity and the efficiency of enterprises, the service industry continued to contract employment in May, but the decline was the lowest since February. The employment index of manufacturing industry also rebounded slightly in the contraction area. On the whole, the two industries continue to reduce employment, but the rate of decline is slowing down.

Due to the resumption of normal business after the resumption of operation, the backlog business volume of service enterprises declined for third consecutive months, but the drop was slight. The backlog of workload in manufacturing enterprises has dropped for the first time since February 2016, driving the overall backlog workload down for the first time since June 2019.

In May, the prices of service industry inputs were basically the same as those in April. Some enterprises reflected that the cost of employment increased due to the re employment of enterprises, and some enterprises also called for increased spending cuts. The purchase price of raw materials for manufacturing industry rose slightly in the contraction area. The combination of the two and the comprehensive input cost dropped slightly for second consecutive months.

In order to stimulate sales, service enterprises continue to reduce the charging price; manufacturers basically maintain the price of products unchanged, resulting in the overall output price continues to decline.

The optimism of the service industry is slightly lower than that of April, but it has only dropped slightly in the expansion area. The industry generally expects that the market demand will be improved after the improvement of the epidemic situation. Manufacturing optimism is rising in the expansion area.

Wang Zhe, senior economist at Caixin think tank, said that manufacturing and service industries expanded significantly in May. Service industry has recovered rapidly from the outbreak, and demand recovery is stronger than manufacturing industry. The improvement of the ratio between supply and demand can not completely offset the negative impact of the epidemic, and it will take some time to normalize the economy.