China’s Caixin services PMI for April came in 44.4 at vs. 51.0 expected and 43.0 last, which showed that the service sector conditions remain challenging as pandemic weighs on demand.
Meanwhile, the Composite Output Index rose to 47.6 in April from 46.7 booked in the previous month.
Quotes from Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group
“The Caixin China General Services Business Activity Index rose slightly to 44.4 in April from the previous month, staying at a low level. Domestic services activity remained under notable pressure amid the coronavirus pandemic.
1. Falling overseas demand dragged on the services sector. The gauge for total new business remained in contractionary territory but improved somewhat from the previous month. The measure for new export business dropped to the secondlowest level since the data series began in September 2014, just above the February reading. The gauge for outstanding business fell further into negative territory, reflecting sluggish demand.
2. Employment in the services sector contracted at the fastest pace on record. The measure for employment hit its lowest level since the survey began more than 14 years ago. China will work to bail out services companies hit hard by the pandemic, as policymakers have made stabilizing employment their top priority. Bigger tax and fee cuts are urgently needed.
3. Service providers’ business confidence recovered markedly. The fall in prices that companies charged customers slowed down, and input costs rose at a slower clip amid shrinking employment and falling oil prices. This helped ease pressure on company profits. The gauge for business expectations for the coming 12 months rose noticeably, suggesting that companies grew more optimistic about the prospects of a recovery in consumption.”
AUD/USD unfazed by downbeat data
The big miss on the Chinese Services PMI numbers failed to have any impact on the Aussie dollar, as AUD/USD challenges highs near 0.6410, up 0.13% on the day.