China services growth slows in December: HSBC PMI

China’s services sector saw its slowest rate of expansion in nearly a year and a half in December, a private sector survey showed on Friday, in another piece of evidence that a fourth-quarter economic growth revival will remain modest.

The HSBC services Purchasing Managers’ Index (PMI) for December softened to 51.7 in December from 52.1 in November. The December reading was the lowest since August last year.

A reading above 50 indicates growth is accelerating, while one below 50 indicates it is slowing.

The HSBC services PMI follows a complementary survey by the National Bureau of Statistics, which found non-manufacturing activity rose at its fastest pace in four months, to 56.1. The two surveys differ somewhat in methodology and scope, with the HSBC survey better reflecting the private sector and the NBS survey more focused on state-owned firms.

“Despite the moderation of December’s headline services PMI, the underlying strength of services sectors improved in terms of stronger new business flows and employment growth,” Hongbin Qu, HSBC’s chief economist for China, wrote in a note accompanying the results.

He expects China’s GDP growth to recover to about 8 per cent in the fourth quarter, after slowing to 7.4 per cent in the third.