(Yicai Global) July 5 -- Activity in China’s services sector expanded at the quickest clip in June since August 2021 as the economy bounces back following a resurgence of Covid-19 in the country, according to a widely watched private survey.

The Caixin purchasing managers’ index for services stood at 54.5 in June, a gain of 13.1 percentage points from May and ending three consecutive months of contraction, data released by financial media group Caixin showed yesterday. A mark above 50 indicates expansion and one below contraction.

The Caixin PMI for manufacturing gained 3.6 percentage points last month from the month before to 51.7, the highest in a year, while the Caixin composite PMI soared 13.1 percentage points to 55.3, the most since January 2021.

The data is in line with that of the National Bureau of Statistics released earlier this month. The official services PMI jumped 7.2 percentage points to 54.3 in June, the official manufacturing PMI nudged up 0.6 percentage point to 50.2, while the NBS’ composite PMI, which comprises both factory and service activity, gained 5.7 percentage points to stand at 54.1.

Both supply and demand in the service sector rebounded last month, although supply is recovering faster than demand. The business activity and new orders sub-indexes both returned to expansion territory.

Business activity has improved since the lifting of restrictions to control a wave of Covid-19, and the number of customers and amount of spending has increased, those companies polled said. However, overall demand is still suppressed by the pandemic and the number of new orders did not improve much.

The new export orders sub-index for services remained in contraction territory for the sixth straight month due to the ongoing pandemic and travel restrictions.

And the job market remains weak. Companies slashed headcounts to cut costs and some employees left due to the outbreaks. As a result, the employment sub-index remained below the benchmark for the sixth month running, although it was slightly higher than the previous two months.

The input price sub-index dropped to a two-year low due to the falling raw material prices and the savings made by lay-offs. The ex-factory price index remained above the threshold for the second consecutive month but the growth rate slowed from May.

Business expectations were unchanged from May, with some companies still concerned that future flare-ups will continue to affect business and demand.

Editor: Kim Taylor