The results of a study published by Caixin and S&P Global showed that the growth of activity in the service sector accelerated to a 5-month high, helped by an increase in new orders.
The service PMI rose to 52.9 in December from 51.5 in November. The index remains above the 50-point mark, indicating an expansion of activity in the sector, for the 12th month in a row. In addition, the December reading was the highest since July. Economists had expected the index to rise only to 51.6.
The overall expansion was largely driven by new business as it expanded the most since May. Export orders rising for the fourth consecutive month and hitting the highest levels since June. According to official data, around 214,000 travelers from France, Germany, Italy, the Netherlands, Spain, and Malaysia entered China in December after the visa-free policy took effect, up 28.5% from November.
Meanwhile, improved demand conditions prompted companies to increase the number of employees (for the first time in three months), with the employment sub-index moved into expansion territory after a contraction in November. The data also showed that backlogs of work were unchanged in December. As for the inflationary situation, input price inflation rose to a 5-month high, and output price inflation fell to a 4-month low amid efforts to attract demand and secure new business. Meanwhile, service companies remained optimistic about their business activity in 2024, while the level of positive sentiment increased to a 3-month high, though it was still below the series average.
The Composite PMI, which measures changes in activity in the manufacturing and services sectors, rose to 52.6 in December from 51.6 in November. This was the 12th straight month of growth in private sector activity and the steepest pace since May.