The S&P Global PMI composite index for China increased to a twelve-month high of 54.1 in May from 52.8 in April, indicating that China's economy has gained momentum. The business activity index for China's services sector, also published today, rose from 52.5 to 54.0, while the previously published headline index for the manufacturing PMI survey rose from 51.4 in April to 51.7 in May. Official PMI survey data published last week, in contrast, showed renewed contraction in the manufacturing sector and somewhat weaker growth in the non-manufacturing sector in May.

Respondents to today's service sector survey reported stronger growth in output, new orders, and new export orders in May, with all increasing at the fastest pace in several months. Payrolls were reported to have risen for the first time in four months, while the survey's measure of confidence fell but remained positive. Respondents also reported stronger growth in input costs and a bigger increase in selling prices.

Today's data were well above the consensus forecast of 52.6 for the service sector survey's headline index and 52.7 for the composite index. The China RPI and the RPI-P rose from minus 21 to zero and from minus 30 to minus 8 respectively, indicating that recent Chinese data in sum are now coming in close to consensus forecasts.

S&P's services PMI is expected to hold steady in May at 52.6 versus April's 52.5 and March's 52.7.

The S&P China Services PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private service sector companies. The panel has been carefully selected to accurately replicate the true structure of the services economy.

The S&P China Composite PMI is a weighted average of the Manufacturing Output Index and the Services Business Activity Index, and is based on original survey data collected from a representative panel of over 800 companies based in the Chinese manufacturing and service sectors.

The PMIs have developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.