Chinese Yuan: Services PMI rebound keeps PBoC cautious – Commerzbank
Commerzbank says China’s August Services PMI rebound highlights some resilience in private-sector activity, but weak retail sales, soft inflation and higher unemployment still point to fragile domestic demand.
In August, China's private services sector activity showed a stronger rebound than anticipated, according to Commerzbank. The RatingDog China Services PMI climbed to 51.4, surpassing the Bloomberg consensus of 50.6. The increase comes after a near two-year low in July and pushed the composite PMI to 52.1 from 50.8. This marks a recovery from the private sector, but it does not significantly influence the People's Bank of China's (PBoC) policy decisions.
Retail sales growth was only 0.6% year-over-year in July, and the jobless rate rose to 5.2%, indicating an uneven and fragile consumption recovery. The divergence between the private and official PMI gauges highlights the need for further support if growth weakens as the year ends. The PBoC retains room to ease further if economic conditions deteriorate into year-end, but the stronger PMI print does not necessitate immediate action.
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