Caixin PMIs Outperform Official Prints, Questions Remain If June Will See A Repeat

The Caixin services PMI printed above expectations in a similar fashion to the manufacturing PMI. The 57.1 outcome was a touch below the Mar outcome of 57.80, but is quite elevated from an historical standpoint. The composite PMI now stands at 55.6, which is the highest print since Dec 2020.

• These results are in contrast to the official PMI prints, which surprised on the downside for both manufacturing and services at the end of May. The official composite PMI was 52.9 (from 54.4 prior).
• The detail of the Caixin services PMI print showed that activity was boosted by the May day holiday period, which aided the hotels, restaurants and travel agency segments.
• This aided jobs growth, albeit at a slower pace, while pricing power rose at the fastest pace since Feb 2022.
• Optimism around the outlook eased though (back to Dec 2022 levels). Coupled, with reduced impetus following the May day holiday raises question marks around how the June figures will look.
• "In general, it remains a prominent feature of the Chinese economy that the services sector is stronger than manufacturing," said Wang Zhe, senior economist at Caixin Insight Group. "This divergence highlights that economic growth is lacking internal drive and market entities lack sufficient confidence, underscoring the importance of expanding and restoring demand," he said.