In Beijing on February 5, a private sector survey revealed that China's services sector grew at a slower rate in January, impacted by the Lunar New Year holidays which led to a decline in employment. However, business sentiment improved amidst these conditions.
The Caixin/S&P Global services Purchasing Managers' Index (PMI) dropped to 51.0 from 52.2 in December but remained above the 50-point mark, indicating expansion. Similarly, the official PMI indicated a decrease in services activity to 50.3 from 52.0.
The survey noted a slowdown in new business growth and a decline in employment to the lowest level since April 2024, partly due to the early Lunar New Year holiday causing temporary closures in the hospitality sector.
Moreover, unfinished work decreased for the first time in six months due to slower new business growth and enhanced operational efficiency. While business sentiment improved from the previous month, concerns regarding heightened competition and trade uncertainties persisted.
The imposition of tariffs by the U.S. prompted swift retaliation from China, impacting economic realities. Experts like Thomas Gatley from Gavekal Dragonomics emphasized China's ability to mitigate growth damages, whereas Julian Evans-Pritchard from Capital Economics highlighted potential geopolitical advantages for China amid U.S. actions.
The Composite PMI, combining manufacturing and services PMIs, decreased to 51.1 in January from 51.4 in December, reflecting a slowdown in the pace of growth. Despite challenges, China aims to prioritize domestic consumption in its economic policies this year.
During the Lunar New Year holiday, China's box office saw record revenues attributed to the success of sequels to popular local films. Some regional governments also distributed cinema vouchers to stimulate consumer spending.