The services sector in China continued to expand and recover in the aftermath of the coronavirus pandemic for the fourth consecutive month but the pace of expansion slowed down slightly in August. The Caixin/Markit services PMI slid to 54 in August from 54.1 in July but remained above the 50-threshold indicating expansion.

After six months of layoffs, services sector firms restarted hiring in August as activity increased following the lifting of lockdown measures across China. The services sector accounts for around 60% of the country’s economy and offers employment opportunities to around 50% of the urban workforce.

The growth in the services sector continued to be driven by rising domestic demand even as export orders remained in contraction in August. On a slightly positive note, the pace of contraction in new export orders has slowed down since the previous month.

Businesses in the sector remain optimistic about their outlook for the next year, but the level of optimism has slid slightly lower from the previous month when it had soared to the highest level in several years. Senior Economist at Caixin Insight Group, Wang Zhe, observes, “The ongoing resumption of work and normalisation of market demand continued to promote the post-epidemic economic recovery.”