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PMI for China’s Services Sector Showed Solid Growth in March by Virtue of the Surge in Orders

According to a global survey released on April 6th, the Caishin/S&P China’s service sector Purchasing Managers’ Index (PMI) grew at its fastest pace in two and a half years in March, driven by a surge in orders. The survey also showed a strong growth in service sector employment.

The PMI for China’s services sector rose to 57.8 in March from 55.0 in February, marking the third consecutive month of gains and the fastest pace since November 2020. These results are in line with the data from the National Bureau of Statistics (NBS), which reported a March services PMI of 58.2, up from 56.3 in February. An index above 50 indicates that China’s service sector continues to expand.

China, the world’s second-largest economy, has set a 2023 economic growth target of around 5 percent after expanding just 3 percent in 2022, the slowest pace in nearly 50 years. In order to support this goal, The People’s Bank of China cut the reserve ratio of commercial banks (RRR) on March 17th, marking the first cut of the year. The move aimed to increase liquidity in the banking system and reduce the cost of funding for the business sector, as well as stimulate economic recovery. The RRR cut of 0.25% for all financial institutions has been in effect since March 27th.

The strong growth in China’s services sector, which accounts for over half of the country’s economy, is a positive sign for the country’s economic recovery.

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