China’s Caixin services PMI quickens to a 14-month high in March, at 54.4 points

A private survey on China’s services sector showed activity among smaller Chinese firms performing better-than-expected for the month of March as it rose to a 14-month high supported by improved demand locally and abroad. The improvement also reflects signs of government stimulus’ policies easing in.

China’s Caixin/Markit Services purchasing managers’ index (PMI) for March came in at 54.4 points, rising from the 51.1 points in February.

Economists in a Reuters poll had expected the sector to rise above the 50-mark that separates expansion and contraction, at a reading of 52.3 points.

The gauge for new business surged to the highest since January last year, reflecting an improved demand for services. Although the employment sub-index continued to edge lower, it remained in expansionary territory.

Even so, growth in operating costs continued to outpace prices charged by services firms, which indicates pressures on the profit margins of businesses.

Respondents to the survey had said that the activity was supported by stronger demand, improved access to financing, and new state policies.

However, experts said it is still too early to tell if China’s economy has turned the corner, and are looking at economic data in the months ahead to get a better sense on the effects from government spending.

Manufacturing PMI numbers improved for March

The private services sector survey results for last month chimed a similar tune to official and private manufacturing surveys days ago which showed an unexpected return to growth in March, fuelling hopes of a China bottoming out.

China’s Caixin/Markit manufacturing services PMI picked up to an eight-month high, at 50.8 points for March, better than the expected 49.9 points from a Reuters poll. Official PMI numbers were at 50.5 points, up from February’s three-year low of 49.2 points.

China has been broadly affected by the weakened trade due to the United States (US)-Sino trade conflict while it copes with slowing domestic demand as consumers tighten their purse string amid its own economic slowdown.