(Yicai Global) Nov. 4 -- Activity in China’s services sector picked up for a sixth month in a row in October, according to a widely watched private survey, indicating that the sector has come back from a coronavirus-induced downturn at the year’s start.

The Caixin purchasing managers’ index for services stood at 56.8 last month, an increase from 54.8 in September and the highest reading since June. A figure above 50 signals expansion.

The headline figure, released today, is consistent with official figures for October published earlier by the National Bureau of Statistics. The Service Industry Business Activity Index fell 0.3 point to 55.5, while the Composite PMI rose 0.2 point to 55.3, according to the bureau.

The service sector’s recovery initially lagged a pickup in manufacturing activity, but continues to gather pace as domestic demand fuels the revival.

Coronavirus outbreaks overseas put pressure on external demand in the manufacturing and service industries, and the pandemic situation in Europe and the United States will affect future economic trends, said Wang Zhe, senior economist at Caixin Think Tank.

The sub-index for new orders rose to the third-highest level since September 2010. That is due to an ongoing upturn in demand and the launch of new products, according to a survey of sample companies. But new orders from overseas have fallen for a four straight month, and export sales dropped due to the second wave of the pandemic in several export markets.

The sub-index for employment expanded for a third month in a row, reaching the highest peak since October 2019.

The Service Business Expectations Index also hit the highest point since May 2012, showing that businesses are very optimistic about the pandemic continuing to be effectively controlled in China in the coming year and the continued economic recovery.

The economic revival is likely to go on in the next few months, but caution is advised over the normalization of monetary and fiscal policies in the post-pandemic period, Wang said.

Published two days ago, the Caixin manufacturing PMI, one of the two main gauges of factory activity in China, stayed in expansion territory for a sixth straight month in October, edging up 0.6 point to 53.6. That was the highest level since February 2011. Spurred by that, Caixin’s composite PMI rose by 1.2 points to 55.7, the fastest expansion since December 2010.

Editor: Tom Litting