Expansion in China’s services industry slowed last month from the previous month, a private survey showed, providing more evidence that the key driver of the nation’s post-COVID-19 recovery is cooling.
The Caixin China services purchasing managers’ index declined to 53.9 from 57.1 in May, Caixin and S&P Global said in a statement yesterday, the weakest since January.
Any reading above 50 indicates an expansion from the prior month, while a number below that suggests contraction.
The drop indicates the stronger leg in China’s K-shaped economic recovery this year is losing momentum, as consumers scale back spending on services, such as travel and restaurants amid elevated youth unemployment and a gloomy income outlook. The data will likely spur more calls for the government to ramp up measures to support growth.
“The pressure is mounting to stabilize employment,” Jones Lang Lasalle Inc chief economist and head of research for Greater China Bruce Pang (龐溟) said.
“Measures already introduced have mainly focused on providing a floor to economic growth, but we need more comprehensive, larger-scale and stronger-than-expected policy support at a time when market demand and confidence have not yet had a clear recovery,” he said.
The services recovery driven by increased mobility appears to have reached its peak, Oversea-Chinese Banking Corp (華僑銀行) Greater China research head Tommy Xie (謝東明) said.
“The next task for China is transitioning from a recovery-driven growth model to an expansionary growth model,” Xie said. “That will require policy support.”
Still, some economists cautioned that Beijing might not rush to take radical action.
“It is still unclear to me if the government will launch aggressive policy stimulus at this stage,” Pinpoint Asset Management Ltd (保銀私募基金管理) chief economist Zhang Zhiwei (張智威) said. “The government may continue to hold a ‘wait and see’ stance for now.”
Investors are watching closely for any signal of more stimulus when the Chinese Communist Party’s Politburo meets later this month.
The Caixin survey focuses on smaller companies compared with the official services PMI.
Results published last week for the government-led poll showed the services expansion moderating for a third straight month. The manufacturing industry is struggling to rebound from months of contraction, official data showed.
TECH BOOST: New TSMC wafer fabs in Arizona are to dramatically improve US advanced chip production, a report by market research firm TrendForce said With Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) pouring large funds into Arizona, the US is expected to see an improvement in its status to become the second-largest maker of advanced semiconductors in 2027, Taipei-based market researcher TrendForce Corp (集邦科技) said in a report last week. TrendForce estimates the US would account for a 21 percent share in the global advanced integrated circuit (IC) production market by 2027, sharply up from the current 9 percent, as TSMC is investing US$65 billion to build three wafer fabs in Arizona, the report said. TrendForce defined the advanced chipmaking processes as the 7-nanometer process or more
China’s Huawei Technologies Co (華為) plans to start mass-producing its most advanced artificial intelligence (AI) chip in the first quarter of next year, even as it struggles to make enough chips due to US restrictions, two people familiar with the matter said. The telecoms conglomerate has sent samples of the Ascend 910C — its newest chip, meant to rival those made by US chipmaker Nvidia Corp — to some technology firms and started taking orders, the sources told Reuters. The 910C is being made by top Chinese contract chipmaker Semiconductor Manufacturing International Corp (SMIC, 中芯) on its N+2 process, but a lack
Who would not want a social media audience that grows without new content? During the three years she paused production of her short do-it-yourself (DIY) farmer’s lifestyle videos, Chinese vlogger Li Ziqi (李子柒), 34, has seen her YouTube subscribers increase to 20.2 million from about 14 million. While YouTube is banned in China, her fan base there — although not the size of YouTube’s MrBeast, who has 330 million subscribers — is close to 100 million across the country’s social media platforms Douyin (抖音), Sina Weibo (新浪微博) and Xiaohongshu (小紅書). When Li finally released new videos last week — ending what has
NVIDIA PLATFORM: Hon Hai’s Mexican facility is to begin production early next year and a Taiwan site is to enter production next month, Nvidia wrote on its blog Hon Hai Precision Industry Co (鴻海精密), the world’s biggest electronics manufacturer, yesterday said it is expanding production capacity of artificial intelligence (AI) servers based on Nvidia Corp’s Blackwell chips in Taiwan, the US and Mexico to cope with rising demand. Hon Hai’s new AI-enabled factories are to use Nvidia’s Omnivores platform to create 3D digital twins to plan and simulate automated production lines at a factory in Hsinchu, the company said in a statement. Nvidia’s Omnivores platform is for developing industrial AI simulation applications and helps bring facilities online faster. Hon Hai’s Mexican facility is to begin production early next year and the