A key pulse check on China's economy due today is likely to show the services sector continued to hum along in April, but a broader slowdown looms, Li Wei, a China economist at Commonwealth Bank of Australia, told CNBC.
The Caixin services purchasing managers' index (PMI) for April, compiled by Markit, likely moderated to around 52, Li estimated, from March's 52.2. A reading above 50 indicates activity is growing, while one below that level suggests a contraction. The survey is due for release at 9.45 a.m. SIN/HK on Thursday.
That would be in line with the official services PMI, released at the weekend, which came in at 53.5 in April, down a tad from 53.8 in March. The Caixin survey focuses on small- and medium-sized enterprises, while the official data tracks larger companies.
"In the second quarter, the general growth momentum in China should remain relatively healthy, given that the housing market is recovering, the banks are extending more loans to the sector, so basically speaking the services sector should remain resilient and in healthy shape in the second quarter," Li said.
In addition to housing, Li also sees momentum coming from infrastructure investment, particularly in the utilities sector, which includes electricity and water.