May PMI at 54.4 signals robust expansion, outpacing expectations and contrasting with regional stagnation amid energy pressures.
China’s services sector expanded at its fastest pace in three months in May, with the PMI rising to 54.4 from 52.6 in April. The increase surpassed expectations of 52.3, driven by a 41st consecutive month of new order growth and a return to employment expansion.
The latest reading marks the second-strongest composite PMI in two years, reinforcing confidence in Beijing’s domestic demand support measures. However, input inflation hit a 19-month high, linked to rising oil and fuel costs, posing a risk to margins if energy prices persist.
The data contrasts sharply with stagnant or contracting PMIs in Japan and Australia, suggesting China’s resilience amid global economic challenges. The PBOC may maintain current policy settings given the expansionary momentum.