Services sector in China sees acceleration in growth in March with increased new business volume, marking fastest growth in 3 months.

Despite Job Losses, Manufacturing and Services Sectors Show Positive Signs for Future Growth

In March, the manufacturing and services sectors experienced growth in supply and demand, with exports improving and sustained market optimism. This acceleration in growth, along with the positive Caixin manufacturing PMI, led to the composite PMI rising to 52.7 last month from 52.5 in February. This was the highest reading since May 2023.

Despite this positive outlook for new business expansion and business confidence, there was no significant increase in recruitment levels. Employment levels shrank for a second consecutive month in March, although the rate of job shedding did ease from February. Respondents attributed this decline in payroll numbers to resignations among staff and redundancies made to improve productivity.

The subindex of future activity increased for the first time in three months, further supporting this optimism. The pace of new business expansion was the fastest since December, thanks to improving underlying demand and efforts to boost new orders. However, economist Wang Zhe from Caixin Insight Group stated that employment levels continued to contract in both sectors, while input and output prices remained low. This indicates that sluggish demand persisted despite the overall positive outlook for new business expansion and business confidence.

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