(Yicai) June 5 -- Activity in China’s services sector expanded for the 17th straight month in May and logged the fastest pace of growth in 10 months, as new business and export orders climbed and employment rose for the first time in four months, according to a widely watched private survey.

The Caixin services purchasing managers’ index was 54 last month, compared with 52.5 in April, according to data the financial media group released today. That was the fastest pace of growth since last August. A reading above 50 indicates expansion.

The services activity gauge for May published by the National Bureau of Statistics last week edged up to 50.5 from 50.3 the month before.

Also published today, the Caixin composite PMI, which combines services and manufacturing, rose to 54.1 from 52.8, the highest since May last year. The Caixin manufacturing PMI, released earlier this week, nudged up to 51.7 from 51.4, the most since July 2022.

Sub-indexes of Caixin’s services PMI pointed to robust supply and demand. Operating activity and new orders expanded for the 17th straight month, hitting their highest levels since August and June, respectively. New export orders climbed for the fourth month in a row and expanded for the ninth consecutive month.

As supply and demand increased, service providers stepped up hiring. Employment climbed to the highest level since October, snapping a three-month contraction. Survey respondents indicated that they are recruiting to meet growing business needs. Increased output also made sure a backlog of orders was reduced.

Business sentiment remained upbeat, despite reduced optimism amid growing concerns about the global economy and the rising cost of raw materials. Consequently, the sub-index for business expectations fell lower than the long-term average despite remaining in positive territory.

Supply and demand in the two sectors, especially services, accelerated in May, said Wang Zhe, senior economist at Caixin’s think tank. Manufacturing and service exports were positive and market sentiment was optimistic, he said.

But due to the combined and protracted impact of adverse external factors, expectations are weak, Wang said, adding that China should strengthen the efficacy and consistency of policies aimed at steadying the economy, boosting internal demand, and bolstering employment.

Editor: Emmi Laine