China's Caixin services PMI drops to 52.7 in May, misses estimates

China's Caixin services PMI for May came in at 52.7 vs. 54.3 expected and 54.5 last, which showed that the Chinese business activity expanded modestly in May.

Meanwhile, the Composite Output Index eased to three-month lows of 51.5 in May from April’s reading of 52.7.

Quotes from Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group:

“The Caixin China General Services Business Activity Index fell to 52.7 in May from the recent high of 54.5 in April, although it remained firmly within the expansionary territory. Among the gauges included in the survey:

1) The gauge for new business fell from the past month’s recent high but remained in expansionary territory, reflecting slowing growth in demand across the services sector. 2) The measure for employment fell from the past month’s recent high while remaining within the expansionary territory, suggesting jobs growth is slowing. 3) Gauges for input costs and prices charged by services providers both fell slightly while remaining in expansionary territory. Growth in input costs outpaced that of prices charged, indicating that services companies remained under significant pressure. 4) The measure for business expectations continued to fall, despite staying in positive territory, reflecting services providers’ weakening confidence in their future prospects.”