(Yicai Global) July 3 -- A private gauge of services activity in China climbed to an over 10-year high in June, extending its gains to a second month.

The Caixin China General Service Purchasing Managers’ Index was 58.4 for last month in a 3.4 percentage point rise from May, its highest spike since May 2010.

The previously announced Caixin China Manufacturing PMI for June swelled by 0.5 percentage points to 51.2. The PMIs of the two major sectors have thus both rebounded, boosting the Caixin China General Composite PMI for the month by 1.2 percentage points to 55.7, its most elevated reading logged since December 2010.

The trend charted by Caixin is in line with that of China’s National Bureau of Statistics. NBS’s China General Services PMI was 53.4 in in June in an 1.1 percentage point jump. The composite PMI also bounced back 0.8 percentage points to 54.2.

The service sector's new order index in June likewise hit a pinnacle since September 2010, with two months of growth in a row as Covid-19 pandemic prevention and control measures slackened. The new export order index rebounded slightly for the month and has reverted to growth since February. Driven by swelling domestic and overseas demand, the new manufacturing orders index returned to its first rise since February. New orders continued to climb to an apex unseen since February 2011, while the decline in total new export orders narrowed, per Caixin.

Breaking the Surface

The market will continue to mend with the expected further loosening of counter-pandemic rules and controls. The expectation for services in the month rose above zero to reach a three-year high, while that for manufacturing also surfaced from beneath the waterline.

The manufacturing and service sectors gained growth in both production and demand over June. The pandemic hit services harder, but the sector is proving to have stronger recovery momentum than manufacturing in the post-pestilence period. Export demand in the service field is reviving, while external manufacturing demand is still under great strain.

Employment issues remain the top priority after manufacturing and service employment shrank in June. To solve these issues, further resumption of production at the macro level as well as government introduction of more targeted relief measures at the micro level is needed to help companies surmount difficulties, said Wang Zhe, a senior economist for the Caixin Insight newsletter.

The official PMI manufacturing data the National Bureau of Statistics compiles encompasses 3,000 mostly state-run companies. The Caixin purchasing managers' indexes, also known as the Caixin-Markit PMIs, sample 500 mainly small and private businesses.

A reading on either above 50 indicates expansion; one below reflects contraction.

Editor: Ben Armour