China PMI: Business Activity Rebounds in November from Services Sector

By: Bonny Markets

In November, service sector activity in China grew more than expected, as shown by a private survey reported on Tuesday. This growth represents a recovery from a decline seen earlier this year as ongoing stimulus measures from Beijing helped boost local demand.

China’s Caixin Purchasing Managers’ Index (PMI) for the services sector rose to 51.5 in November, topping expectations of a rise of 50.7. This figure also experienced a significant recovery from the figure of 50.4 that occurred in October, which almost entered contraction territory.

A reading below 50 indicates contraction in the sector.

China’s services sector was the only bright spot in the economy this year, experiencing expansion for 11 consecutive months as demand for services remained stable. Growth in the sector also helped to ease some weakness in the manufacturing sector, which was being hit by falling local and overseas demand.

Tuesday’s data showed that local demand was increasing, while service providers in China also saw some improvement in export demand.

However, data from Caixin also noted that growth in business activity remained moderate compared to pre-COVID levels, while employment remained contracting as businesses remained cautious in hiring.

Nonetheless, the positive services PMI signaled strength in business activity in China, and also came just days after stronger-than-expected manufacturing data.

The Caixin survey is in major contrast to the government’s PMI reading released last week, which showed that China’s manufacturing activity shrank in November, while non-manufacturing activity approached contraction territory.

But the Caixin survey also differs from the government’s reading in the range of businesses it covers – with its focus more on smaller private companies, as opposed to the official survey which covers large state-run companies. Typically, investors use both surveys to get a broader picture of China’s economy.

Along with the positive Caixin Manufacturing PMI released last week, China’s business activity saw a moderate recovery in November.

Much of the recovery has been fueled by consistent liquidity injections by Beijing, which now has plans to issue bonds worth 1 trillion yuan ($139 billion) in the coming months.

USD/CNH – Technical Analysis

The USD vs Yuan pair has been declining since the last week with pressure from the weakening dollar as a result of anticipation of a pivot from the Fed. Currently, it still tends to stagnate in the ranging area below the downtrendline. There is still a possibility for USDCNH to be corrected if it successfully breaks out resistance at 7.18000.


The significant increase in China’s services sector activity in November, as revealed through the Caixin PMI index, suggests a promising recovery narrative for the global economy. Although there are notes that growth is still moderate compared to the pre-pandemic period, this increase provides optimism over the potential for a stronger economic recovery. Consistent stimulus factors from the Chinese government have been the main driver behind this recovery, while concerns over continued contraction in employment levels suggest that further measures may be needed to ensure continued growth. However, with the services sector being a key pillar in China’s economic growth, this expansion provides a positive impetus that not only strengthens the domestic economy but also provides a signal of optimism for global markets.

Risk Warning: The above content is for reference only and does not represent Bonny Markets's position. Bonny Markets does not bear any form of loss caused by any trading operations carried out by this article. Please be firm in your thinking and carry out appropriate risk control.

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