China services grow at fastest pace in more than decade

China’s services sector expanded at the fastest pace in over a decade in June as the easing of coronavirus-related lockdown measures revised consumer demand, a private survey showed on Friday, though companies continued to shed jobs.

The Caixin/Markit services Purchasing Managers’ Index (PMI) rose to 58.4, the highest reading since April 2010, from May’s 55.0, pulling further away from the trough hit in February as the coronavirus lockdown paralysed the economy.

The 50-mark separates growth from contraction on a monthly basis.

The rebound suggests China’s overall recovery is becoming more balanced and broader based as life slowly returns to normal in one of the world’s biggest consumer markets, though analysts believe it will take months for activity to return to pre-crisis levels.

The services sector accounts for about 60 percent of the economy and half of the urban jobs, and includes many small, private companies which had been slower to recover initially than large manufacturers. Heavy job losses, pay cuts and fears of a second wave of infections have made some consumers cautious about spending and going out again.

The Caixin survey showed a sub-index for new business received by Chinese services firms rose to 57.3 from 55.8 in May, with the rate of growth accelerating to the fastest since August 2010.