BEIJING- 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/Markit services Purchasing Managers’ Index (PMI) rose to 55.0 in April from 44.4 in April, hitting the highest level since late 2010. The 50-mark separates growth from contraction on a monthly basis.
The return to expansion for China’s services sector, an important generator of jobs which accounts for about 60 percent of the economy, was driven by a sharp rise in domestic new business though export orders fell for the fourth month in a row.
Gauges for employment also continued to contract, although at a slower pace.
“Employment in the services sector remained worrisome,” said Wang Zhe, senior economist at Caixin Insight Group.
Avoiding mass unemployment is a top government priority, with a target to create over 9 million urban jobs this year.
The economy shrank 6.8 percent in the first quarter from a year earlier, the first contraction since quarterly records began, and analysts believe it will be months before broader activity returns to pre-crisis levels.
Highlighting the uncertain outlook, the government said in late May it was not setting an annual growth target, for the first time since 2002.
“Demand for services recovered more strongly than that for manufacturing, which was more constrained by sluggish exports amid the ongoing impact of the pandemic’s spread outside China,” said Wang.