China was severely it by the Covid-19 pandemic. Being ground zero for the coronavirus, the nation has dealt with the pandemic for longer than any other country. Fortunately, they were also among the first to get things under relative control earlier this year.

Despite the widespread damage caused to the economy, the recovery in China’s service sector activity has extended into a sixth straight month in October, an industry survey showed; with hiring picking up to the highest level in a year, but with overseas demand slipping.

The Caixin/Markit services Purchasing Managers’ Index (PMI) rose to 56.8 from September’s 54.8, the highest reading since June and staying well above the 50-mark that separates monthly growth from contraction.

China’s services sector is a key contributor to the country and accounts for approximately 60 percent of the total economy and up to half of urban jobs. Initially, the sector saw a slower recovery compared to the manufacturing sector, but over time, the sector’s recovery has gathered pace, especially in the past few months.

Domestic demand drove activity, with the survey showing new export business received by Chinese services firms slipping further into contraction in October, at the fastest rate since July.

“The second wave of coronavirus infections in Europe and the third wave in the U.S. have significantly suppressed China’s overseas demand,” said Wang Zhe, senior economist at Caixin Insight Group, in comments released alongside the survey.

But firms hired more for the third month in a row and at the fastest pace since September 2019, indicating a strengthening recovery in a employment market hit hard earlier in the year by measures to curb the spread of the coronavirus. Despite the challenges they face, service firms have expressed much optimism about future business prospects.

The official PMI showed activity in China’s services sector expanded at the fastest pace since 2013 in October.

Due to massive pent-up demand, stimulus-driven infrastructure expansion, and surprisingly resilient exports, have assisted in boosting China’s recovery. However, recent global outlooks have taken a slight turn for the worse as other countries are seeing a resurgence of the coronavirus; thus potentially affecting China’s exports once more.

“In the coming months, a continued recovery of the Chinese economy is highly likely, but it is necessary to be cautious about the normalisation of monetary and fiscal policies in the post-epidemic period,” Wang said.


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