China's Caixin services PMI: A big beat on expectations

China's Caixin services PMI for January came at 54.7 vs 53.5 exp and 53.9 last, which indicated that the Chinese business activity expanded at the quickest pace for seven years in January.

Meanwhile, the Composite Output Index rose to a seven-year high of 53.7, from 53.0 in December, to signal a solid pace of expansion,” the report noted. 

Quotes from Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group

“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 the stability of demand in the manufacturing industry and the impact of growing costs on the profitability of service providers.”