(Reuters) – China’s services sector returned to growth last month for the first time since January as the economy recovers from strict coronavirus-induced containment measures, although employment and overseas demand remained weak, a private survey showed
The Caixin Services PMI
- China’s May Caixin/Markit services PMI bounces back to growth, rises to 55.0 (vs 44.4 in April), highest since late 2010
- China’s May Caixin/Markit services PMI shows export orders, employment still contracting.
- Caixin Composite PMI May: 54.5 (prev 47.6).
AUD is still below today’s highs following the data. AUD/USD has rallied to a high of 0.6982 today so far.
Description of the Caixin Services PMI
The Caixin Services PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private service sector companies. The panel has been carefully selected to accurately replicate the true structure of the services economy.
Market implications
China’s official manufacturing Purchasing Manager’s Index as well as a private survey, released recently, both showed manufacturing activity in the country expanding in May. This is giving markets hope that other economies will follow in the nation’s footsteps as a template for a global economic V-shaped recovery.
However, the unemployment numbers around the world are not the basis for a healthy economic backdrop. Double-digits in the United States and Europe and as well as in the advanced countries like Australia at the end of this year could prove to be the death knell for risk appetite. If nations have to switch lockdown on and off as they get worried about second waves of virus infection, then this too will stunt market performance.
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