China January Services Activity Improves after Five Months

A private sector survey released on Friday showed that business confidence in China is around 12-year highs, as a result of the rebound in the country’s services sector in January after a five-month slump. This growth was driven by an increase in consumer spending and travel following the relaxation of Covid-19 restrictions.

In January, the Caixin/S&P Global services purchasing managers’ index (PMI) increased to 52.9 from December’s 48.0, above the 50-point threshold that implies expansion in activity.

The reading was consistent with the findings of a more inclusive official services PMI published earlier this week, providing more proof of a recovery in the world’s second-largest economy as reopening-related difficulties subside.

The sudden lifting of pandemic restrictions in Beijing and the subsequent increase in demand for services, notably over the week-long Lunar New Year celebrations, have paved the way for a more rapid and robust economic rebound.