Services sector shows resilience amid tariffs cloud

RTHK

6 days ago

Services sector shows resilience amid tariffs cloud
The Caixin/S&P Global services purchasing managers' index rose to 51.1 from 50.7 for May. File photo: Reuters
China's services activity expanded at a slightly faster pace in May, with new orders growing more quickly than in April, though new export orders declined due to uncertainty stemming from US tariffs, a private-sector survey showed on Thursday.
The Caixin/S&P Global services purchasing managers' index (PMI), rose to 51.1 from 50.7, remaining above the 50-mark that separates expansion from contraction.
The reading was broadly in line with China's official survey, which showed services activity edging up to 50.2 from 50.1 the previous month.
The Caixin PMI is considered a better read of trends among smaller, export-oriented firms, particularly along the east coast, while the official PMI primarily tracks large and medium-sized enterprises, including state-owned companies.
China's economy grew faster than expected in the first quarter, and the government has maintained its annual growth target of around 5 percent.
However, analysts warn that US tariffs could significantly dampen momentum.
Beijing and Washington have agreed to a 90-day pause during which both would cut import tariffs, raising hopes of easing tensions.
Yet investors remain concerned that negotiations could progress slowly amid persistent global economic risks.
"On the external demand front, new export orders remained sluggish in both the manufacturing and services sectors," said Zhe Wang, senior economist at Caixin Insight Group.
"Average costs for businesses rose slightly, but selling prices continued to weaken, increasing profit pressure," Wang added.
Last month, the central bank eased monetary policy to limit damage from the trade war with Washington, and lowered the ceiling for deposit rates to offset margin pressure on banks and prompt savers to spend or invest more. (Reuters)