In May, Caixin'S Service Industry PMI Fell To 55.1

In May 2021, China's service industry continued to repair, but at a slower pace. The Caixin China general service industry business activity index (PMI) in May, released on June 3, recorded 55.1. Although it was 1.2 percentage points lower than the previous month, it was still in the expansion range for 13 consecutive months, and the service industry outlook was still high.

The Caixin China Manufacturing Purchasing Managers Index (PMI) rose 0.1 percentage point to 52 in May, the highest since 2021. The acceleration of PMI expansion in manufacturing industry was not as fast as that in service industry. As a result, the comprehensive PMI of Caixin China fell by 0.9 percentage points to 53.8 in May, indicating that the expansion rate of China's total production and operation activities slowed down, but the expansion rate was still stable, higher than the long-term average.

The PMI trend of Caixin China's service industry is consistent with that of the Bureau of statistics, while the trend of comprehensive PMI is contrary to that of the Bureau of statistics. The business activity index of service industry in May released by the Bureau of statistics dropped slightly by 0.1 percentage point to 54.3, while the composite PMI rose by 0.4 percentage point to 54.2.

The supply and demand of service industry have been expanding for 13 consecutive months, and the expansion rate is slightly slower than that of last month, and it is still in the high boom range. The factor supporting the expansion of business activities in May was the continuous growth of sales. According to the survey sample enterprises, China has successfully curbed the epidemic situation and customer demand has continued to recover; At the same time, some enterprises mentioned that the advent of new products promoted sales.

However, the resurgence of the epidemic in other parts of the world frustrated the new export business, and the external demand of the service industry changed from up to down. In May, the index of new export orders of the service industry fell again below the boom and bust line. The enterprises interviewed said that the negative impact of the overseas epidemic situation can not be ignored.

The employment index of the service industry in May was slightly lower than that of the previous month, but it was still higher than the boom and bust line, indicating that employment in the service industry continued to recover in the post epidemic era. The expansion of employment was not enough to cope with the increase in demand, and the service industry backlog index rose to the expansion range in May.

In May, the cost pressure of China's service industry continued to intensify. Enterprises reported that the cost of raw materials, energy, labor and transportation increased significantly, and the service industry input price index set a new record after November 2020. In order to alleviate the pressure of rising costs and to rely on the high demand side, service enterprises continued to raise fees in May, with a significant increase, the most significant since this year. Affected by the above factors, both the input price index and the fee price index of the service industry rose to the highest level in the year in May, and the former rose even more.

Market optimism continued. The business expectation index of the service industry in May was significantly higher than the boom and bust line. The confidence of the industry was generally related to the expected stronger demand at home and abroad, as well as the release of new products. However, some companies worry that the global economy will not know when to recover from the epidemic, so the overall optimism has dropped to a four month low.

Wang Zhe, a senior economist at Caixin think tank, said that in May, the expansion potential of manufacturing industry and service industry was still strong, both sides of market supply and demand expanded simultaneously, foreign demand generally improved, employment market continued to improve, and entrepreneurs were optimistic about the future of service industry. Inflation is still the focus of attention. In May, the cost and charge price indices of manufacturing and service industries all rose. On the one hand, the downward transmission effect of prices has already appeared. Inflation pressure will restrict the space of monetary policy and is not conducive to economic recovery; On the other hand, in the face of rising prices of raw materials, some enterprises began to hoard goods, while some enterprises were faced with the plight of shortage of raw materials, and the supply chain was also significantly affected.

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