While China’s manufacturing industry remains stuck in neutral, there are some encouraging signs emerging from the nation’s services sector, where activity is expanding briskly.
The latest HSBC-Markit services PMI reading for May jumped to 53.5 from 52.9 in April with the reading the highest seen since September 2014.
According to Markit “activity growth at Chinese service providers was supported by a further increase in new work in May. Moreover, the latest increase in new business at service sector companies was the sharpest for three years, with panellists highlighting a general strengthening of client demand and the impact of new projects”.
While China’s services sector is more than financial services, given the contribution it made to first quarter GDP growth in China, one can’t help but think the improvement in the PMI gauge is largely a result of the mega-bull market seen in China’s stock market at present.