China services activity picks up in March

PUBLISHED : Thursday, 03 April, 2014, 9:30am
UPDATED : Friday, 04 April, 2014, 12:41am

Activity in the mainland's services industry rose to a four-month high last month, a private survey showed yesterday, even as persistent weakness in manufacturing has reinforced fears of a sharper-than-expected economic slowdown.

The Markit/HSBC services purchasing managers index (PMI) rose to 51.9 in March from February's 51, buoyed by strong employment.

The second successive monthly increase takes the reading further above the 50 level that separates expansion from contraction.

Earlier, the official services PMI showed a slight dip in the sector's growth in March, to 54.5 from February's 55, but activity remained well in expansion territory.

"The HSBC China Services PMI suggests a modest improvement of business activities in March, with employment expanding at a faster pace," HSBC chief China economist Qu Hongbin said in a statement accompanying the release.

"However, combined with the weaker manufacturing PMI reading, the underlying strength of the economy is softening, which should ultimately weigh on the labour market."

The pick-up in services contrasts with a run of weakening economic indicators this year. On Tuesday, two surveys showed manufacturing struggled last month, with activity at smaller, private firms contracting for the third consecutive month.

On Wednesday, the State Council said it would accelerate construction of rail projects and cut taxes for small firms.

The Markit/HSBC PMI found that service-sector firms remained optimistic last month, generally expecting business activity to be higher than current levels in one year.

Services made up 46.1 per cent of China's gross domestic product last year.