(Yicai Global) Aug. 3 -- Activity in China’s services sector increased at the fastest pace in 15 months in July as Covid-19 restrictions were eased further, according to the findings of a widely watched private survey.

The Caixin services purchasing managers’ index stood at 55.5 last month, up from 54.5 in June and 41.4 in May, data released today by financial media group Caixin showed. It was the quickest expansion since April 2021. A reading above 50 indicates expansion.

The figure was more robust than the official services PMI of 52.8 that the National Bureau of Statistics published yesterday. It fell from 54.3 in June.

“Supply and demand in the services sector expanded,” Wang Zhe, senior economist at Caixin Insight Group, said in a monthly report. “Although Covid restrictions hurt the businesses of some service companies, the economic fallout from this round of outbreaks was fading.”

“In general, the eased Covid situation and restrictions facilitated a continuous recovery in the economy,” he said. “The services sector, which had been previously hit harder by the outbreaks than manufacturing, showed stronger improvement.”

The labor market stayed under pressure, and the financial situation of low-income groups worsened, so policies need to focus on greater job market stability, more subsidies and temporary relief measures, Wang added.

The Caixin manufacturing PMI for July, released yesterday, fell 1.3 point from the month before to 50.4, pushing down the composite PMI by 1.3 points to 54. The official manufacturing PMI came in at 49, down 1.2 point.

New business rose at a faster clip in July, Caixin’s report noted. The increase in overall sales was the quickest since October 2021, with firms pointing to better demand conditions and increasing customer numbers, it said, adding that new export work fell for a seventh month in a row.

“Although firms saw sustained increases in activity and new orders, they maintained a relatively cautious approach to staffing levels, which fell modestly in July,” the report also said. “A number of firms commented on efforts to contain costs and decisions to not replace voluntary leavers.”

Editor: Futura Costaglione