China’s services activity contracted more than expected last month, with spending figures over the long weekend showing that a hit to consumer spending from COVID-19 curbs could linger through this month.
The Caixin China Services purchasing managers’ index (PMI) rose to 41.4 last month from 36.2 in the previous month, Caixin and S&P Global said in a statement yesterday, missing the median estimate of 46 in a Bloomberg survey of economists.
A reading below 50 signals a contraction.
Photo: AFP
COVID-19 restrictions in major Chinese cities began easing last month as case numbers dropped, raising hopes of a pickup from the worst activity levels since early 2020. Shanghai began lifting its two-month long lockdown last week and Beijing has rolled back restrictions as well.
However, the road to recovery could be a long and bumpy one, with regular COVID-19 testing becoming the norm and some controls remaining in place.
Figures from the three-day Dragon Boat Festival from Friday last week showed spending remains depressed.
Domestic tourism revenue dropped 12.2 percent from a year ago, while the number of trips made was down 10.7 percent, data from the Chinese Ministry of Culture and Tourism showed.
China’s service industries posted further declines in business and new orders last month, the PMI statement said.
“May’s reading was the
second-lowest since February 2020, as China’s COVID-19 epidemic still weighed heavily on services activities,” Caixin Insight Group (財新智庫) senior economist Wang Zhe (王?) said in a statement.
“Entrepreneurs overall were still confident that the COVID-19 epidemic will be brought under control, though some remained concerned about a resurgence of COVID-19 in the future,” he said.
Citigroup Inc economists said the drop in travel and spending over the long weekend was smaller compared with those seen during the Workers’ Day holiday last month, which suggest a recovery is under way.
The improvement will likely accelerate from this month onward, they said.
The Caixin survey findings are largely in line with those in the official non-manufacturing purchasing managers’ index, which increased to 47.8 from April’s 41.9, but stayed below the cutoff 50 mark.
The official survey tracks larger companies and includes the construction sector, while the Caixin survey focuses more on smaller ones.
SEEKING CLARITY: Washington should not adopt measures that create uncertainties for ‘existing semiconductor investments,’ TSMC said referring to its US$165 billion in the US Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) told the US that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona. “New import restrictions could jeopardize current US leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the US, including TSMC Arizona’s significant investment plan in Phoenix,” the chipmaker wrote in a letter to the US Department of Commerce. TSMC issued the warning in response to a solicitation for comments by the department on a possible tariff on semiconductor imports by US President Donald Trump’s
The government has launched a three-pronged strategy to attract local and international talent, aiming to position Taiwan as a new global hub following Nvidia Corp’s announcement that it has chosen Taipei as the site of its Taiwan headquarters. Nvidia cofounder and CEO Jensen Huang (黃仁勳) on Monday last week announced during his keynote speech at the Computex trade show in Taipei that the Nvidia Constellation, the company’s planned Taiwan headquarters, would be located in the Beitou-Shilin Technology Park (北投士林科技園區) in Taipei. Huang’s decision to establish a base in Taiwan is “primarily due to Taiwan’s talent pool and its strength in the semiconductor
An earnings report from semiconductor giant and artificial intelligence (AI) bellwether Nvidia Corp takes center stage for Wall Street this week, as stocks hit a speed bump of worries over US federal deficits driving up Treasury yields. US equities pulled back last week after a torrid rally, as investors turned their attention to tax and spending legislation poised to swell the US government’s US$36 trillion in debt. Long-dated US Treasury yields rose amid the fiscal worries, with the 30-year yield topping 5 percent and hitting its highest level since late 2023. Stocks were dealt another blow on Friday when US President Donald
UNCERTAINTY: Investors remain worried that trade negotiations with Washington could go poorly, given Trump’s inconsistency on tariffs in his second term, experts said The consumer confidence index this month fell for a ninth consecutive month to its lowest level in 13 months, as global trade uncertainties and tariff risks cloud Taiwan’s economic outlook, a survey released yesterday by National Central University found. The biggest decline came from the timing for stock investments, which plunged 11.82 points to 26.82, underscoring bleak investor confidence, it said. “Although the TAIEX reclaimed the 21,000-point mark after the US and China agreed to bury the hatchet for 90 days, investors remain worried that the situation would turn sour later,” said Dachrahn Wu (吳大任), director of the university’s Research Center for
RSS