Data: China'S Service Industry PMI Rose To 53.8, And Inflation Pressure Continued To Show

In the first and middle of October, the epidemic situation continued to improve, with the pulling effect of the "11" golden week, the supply and demand of service industry kept expanding, and the prosperity continued to improve.

The Caixin China general service industry operating activity index (PMI) in October, released on November 3, recorded 53.8, up 0.4 percentage points from September, the highest since August 2021, but still slightly lower than the long-term average of 54.1.

Previously released, Caixin's China manufacturing PMI recorded 50.6 in October, up 0.6 percentage points from September, returning to the expansion range. The prosperity of the two industries rebounded at the same time, driving the comprehensive PMI of Caixin China to rise by 0.1 percentage point to 51.5 in October.

This trend is contrary to the National Bureau of statistics PMI. The PMI of the manufacturing industry in October, released by the National Bureau of statistics, decreased by 0.4 percentage points to 49.2 compared with September, which was lower than the boom and bust line for two consecutive months. The business activity index of service industry recorded 51.6, down 0.8 percentage points; The weakness of the two industries at the same time dragged down the comprehensive PMI by 0.9 percentage points to 50.8.

The negative impact of the epidemic weakened and the demand for the National Day holiday increased, which led to the simultaneous repair of the supply and demand of the service industry in October. Both the production index and the new order index reached new highs since August. The enterprises interviewed said that the expansion of business activities was mainly due to the increase of new business and the improvement of domestic epidemic situation.

The improvement of external demand is particularly obvious. As economies recovered from the epidemic and overseas customer demand improved steadily, the number of new export orders in the service industry rebounded to the expansion range in October, with the highest growth rate in six months.

The improvement of supply and demand led to a continued pick-up in employment, and employment in the service industry expanded for the second consecutive month in October. Enterprises that increase employment generally say that customer demand is rising, and enterprises focus on improving production capacity. However, the employment index of that month was only slightly higher than the critical value, which was the same as that in September. The backlog of work in the service industry has stopped the rising trend of the previous three months and remained stable on the whole.

Service prices continue to rise and inflationary pressures continue to emerge. In October, the input price of service industry rose for 16 consecutive months, and increased faster than that in September. The enterprises surveyed reflect that the rise of human cost and raw material price has pushed up the operating expenses of service industry, resulting in pressure on the cost side of enterprises. At the same time, the robust market demand makes the cost side pressure partially transmitted to the downstream, and the service industry sales price index recorded the highest in three months, and higher than the historical average.

In October, service enterprises remained optimistic about their business prospects, but the degree of optimism dropped to the lowest level since July and continued to be lower than the long-term average. The enterprises surveyed expect that the epidemic situation will continue to improve and new business will grow. However, some enterprises are worried that the rising cost and supply chain obstruction will affect their operation in the coming year.

Wang Zhe, a senior economist at Caixin think tank, said that from late September to mid October, the adverse impact of the epidemic on the economy weakened, the market demand was better, the supply was slightly weak, and the manufacturing industry was obviously weaker than the service industry. Supply constraints have become the primary factors affecting economic operation: shortage of raw materials, protection of bulk commodity prices, and superimposed shortage of power supply, which restrict the production of manufacturing enterprises, undermine the stability of supply chain, and have a significant impact on service enterprises. Inflation pressure continues to soar, and the survival pressure of downstream enterprises is highlighted. In terms of policy, we should not only take effective measures to guarantee the supply and price of bulk commodities, but also pay attention to the living conditions of downstream enterprises, especially small and medium-sized enterprises. In addition, since the end of October, the new round of epidemic has affected many provinces, and the adverse impact on the economy will return. It is necessary to make overall plans to effectively prevent and control the epidemic and maintain normal economic order.