The private survey Markit / Caixin PMIs for January

Services 54.7 (highest in nearly 6 years)

  • expected 53.5, prior 53.9

Composite 53.7

  • prior 53.0

Key points

  • Service sector activity expands at fastest pace since May 2012, while manufacturing output also rises solidly
  • Total employment rises at quickest pace for ten months
  • Overall inflationary pressures ease

Commentary from Markit:

  • The Caixin China General Services Business Activity Index rose 0.8 points to 54.7 in January, the joint-best reading since October 2010.
  • The new business sub-index continued to inch up, although by a smaller margin than in the previous two months, reflecting solid demand for services. The input prices sub-index hit the highest since April 2012, due to the impact of rising labor costs and increasing crude oil prices.
  • However, the sub-index of prices charged went down again last month, suggesting that providers of services have failed to fully pass higher costs on to consumers.
  • The Caixin China Composite Output Index increased 0.7 points to 53.7 in January, pointing to continued improvement in the operating conditions of both the manufacturing and services sectors.
  • Caixin PMI readings in January showed that the Chinese economy had a good start to 2018. Looking forward, we should watch for stability of demand in the manufacturing industry and the impact of growing costs on the profitability of service providers.

mtc more to come