Caixin PMI says services sector grew to 3-month high
In an interesting development, a private economic barometer shows that the Chinese service sectors hit a three-month high in October, while the official government number shows the that area of the economy slowing.
Releases Wednesday, the Caixin/Markit Purchasing Managers’ Index (PMI) rose to 52.0 in October from September’s 14-month low of 50.5, expanding at its fastest pace since July 2015.
A reading above 50 points signifies growth on a monthly basis, while one below that points to a contraction.
“This shows that previous stimulus policies have begun to take effect, while the economic structure steadily improved,” said He Fan, Chief Economist at Caixin Insight Group.
The private survey said the jump came from stronger new business, and its sub-index measuring new business jumped to 52.9 from 50.5 the previous month, and the employment sub-index also hit a three-month high.
This stands in direct contradiction to China’s official services survey, which on reported that growth in China’s services industry had cooled in October, growing at its slowest pace in nearly seven years.
On Sunday, the National Bureau of Statistic’s shocked the market when its official non-manufacturing PMI fell to 53.1 in October from 53.4 in September. It also reported that the manufacturing sector remains weak. The official October Purchasing Managers’ Index (PMI) came in at 49.8, matching September’s number and lagging expectations of 50.0,
Reuters said the discrepancy between the two service-sector indexes is probably because the private survey focuses on small and mid-sized companies, while the official gauge looks more at larger state firms.
Asia Unhedged isn’t quite sure what this all means, but any positive news about the Chinese economy is good enough for us.