BUSINESS China services activity in Jan expands for first time in five months, highlighting strong rebound in domestic consumption


China services activity in Jan expands for first time in five months, highlighting strong rebound in domestic consumption

Global Times

21:21, February 03, 2023

China's services activity experienced a rapid rebound in January, with the index for services activity hitting a five-month high, as the overall COVID-19 epidemic situation has improved and strict epidemic prevention and control measures have been largely relaxed, according to a private survey on Friday.

People go shopping at a large supermarket in Nanjing, East China's Jiangsu Province on January 19, 2023. Local stores are seeing booming popularity as the Chinese Spring Festival is approaching. (Photo: cnsphoto)

The Caixin services purchasing managers' index (PMI) rose to 52.9 in January, above the 50-point mark indicating expansion in activity, the highest reading over the past five months from September of 2022. The January reading was up 4.9 percentage points from the previous month.

Caixin manufacturing PMI also grew by 0.2 points in January at 49.2, according to Caixin's survey, which mainly tracks smaller private businesses.

Both indexes indicate a rapid recovery in economic activity in the country. The Caixin China composite PMI, a weighted average of manufacturing and service PMI, rose to 51.1 in January, the highest since September 2022, reflecting the resumption of growth in production and business activities.

The trend echoed the data from the National Bureau of Statistics (NBS). On Tuesday, the NBS said China's official manufacturing and services PMI bounced back into expansion territory, a strong signal of China's accelerating economic recovery following the country's optimization of COVID measures.

This rebound is particularly evident in the services market, with those surveyed saying that market conditions and customer demand will rebound strongly as the economy gradually returns to normal, as optimized COVID-19 response measures bring increasing confidence into the services sector.

Spring Festival consumption reflects China's economic vitality in the new year, and China has basked in festive hustle and bustle as people celebrated the tradition with strong consumer sentiment.

During the week-long holidays, which ended on January 27, sales revenue in China's consumption-related sectors rose 12.2 percent from last year's Spring Festival holidays, according to data from the State Taxation Administration on Saturday.

Over 270,000 people visited the national forest park of Zhangjiajie, of whom more than 200,000 bought tickets during the Spring Festival holidays this year, an increase of nearly 30 percent over the Spring Festival period in 2019, Mao Jianjian, who is in charge of the marketing department of the park, better known as the "Avatar" mountains, told the Global Times on Friday.

Data from travel platforms on Friday showed that ticket sales for the national scenic spot during the Lantern Festival more than doubled compared with the previous year.

The private data also said that the relaxation of travel restrictions has pushed up their exports business, supported by data showing that the new orders index has hit its highest point since April 2021.

Yiwu International Trade City, a major wholesale market complex in Yiwu, East China's Zhejiang Province, reopened on Thursday after closing for the Spring Festival holidays in late January.

Traders interviewed by the Global Times expressed confidence in overseas business, as they saw an influx of overseas orders, which is seen as a good start for the new year in the Chinese lunar calendar.

China's Ministry of Commerce (MOFCOM) on Thursday vowed to ramp up efforts to stabilize exports as a pillar of its national economy in 2023, while leveraging the advantages of its colossal market and increasing imports of quality products from other countries and regions.

Improving expectations, restoring confidence, increasing incomes, expanding consumption, and stimulating domestic demand will be the driving forces for China to accelerate the recovery of the economy, said Wang Zhe, a senior economist at Caixin Insight Group, on Friday.

MOFCOM also said on Monday that it will make restoring and expanding consumption a priority, and make greater efforts to promote foreign trade.

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