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China’s Caixin Services PMI Disappoints in May – Trade War Effect?

Caixin services PMI declined to 52.7 in May from 54.5 in April. Even though the figures remain above the 50-threshold, continuing to indicate expansion, this is lowest level since February.

New export orders for Chinese services businesses registered a steeper fall – down to 51.1 in May from 55.6 in April. Most companies surveyed reported no change in export sales in May, as a result of which new orders’ growth fell to a three month low.

The Caixin/Markit survey also revealed that new jobs in the services sector have grown only marginally – falling from 51.4 in April to 50.4 in May. This indicates that the sector is only slightly better in this aspect.

The ongoing trade war with the US has had a significant impact on China’s manufacturing sector, which is already battling with rising labor costs. So, China was depending more on the services sector to cushion the blow on the overall economy. But these numbers do indicate a considerable deterioration in sentiment and point to a possible slowdown in the economy.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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