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China’s Service Activity Improves: What It Says About the Economy

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China’s service activity in January 2018

According to Markit Economics, China’s service PMI (purchasing managers’ index) showed a solid improvement in January 2018, rising to 54.7 from 53.9 in December 2017. It beat the market estimate of 53.6.

China’s service PMI was affected by the following factors in January 2018:

  • production output and volume rose strongly
  • new business orders improved at a faster rate
  • employment in the service sector rose sharply
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ETF performance

The improvement in China’s service PMI indicates that service demand is improving solidly, consumers are optimistic about demand outlook, and China’s transition from a manufacturing hub to a consumption-driven economy is on track.

The iShares China Large-Cap ETF (FXI) and the Direxion Daily FTSE China Bull 3X ETF (YINN), which track the performance of China’s (ASHR) economy, rose 14.1% and 46.4%, respectively, in January 2018. In the next part of this series, we’ll analyze Indonesia’s manufacturing PMI in January 2018.

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