- Annabel Fiddes, economist at Markit.
Some upbeat signs emerged from China's services sector, where activity expanded briskly in May. The HSBC China Services Purchasing Managers' Index climbed to the highest level in eight months of 53.5 in May, compared with 52.9 in the preceding month, HSBC Holdings PLC said, with both new orders and employment in the sector rising to multi-year highs. The new business sub-component came in at 54.4, up from 52.8 in April, and marking the highest reading since 54.7 in May 2012. Employment in the services sector grew at the fastest rate since January 2013, the data showed, another encouraging sign for Beijing as layoffs continue in the manufacturing sector, China's traditional jobs engine.
Yet, economists remain cautious on China's overall economic outlook, as credit growth remains sluggish and manufacturing stagnates, adding to speculation that authorities will have to add more stimulus to avert a sharper slowdown. China's official non-manufacturing PMI fell to 53.2 in May from 53.4 in April, according to the China Federation of Logistics and Purchasing. The services sector has made up the bigger part of China's economic output for at least two years, with its share rising to 48.2% last year, compared with the 42.6% contribution from manufacturing and construction.
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