Growth in China’s services sector fell to a four-month low last month as business expectations dropped, a government survey showed, adding to evidence that the world’s second-largest economy lost steam into the close of the year.
The official purchasing managers index (PMI) for the non-manufacturing sector dropped to 54.6 in December from November’s 56, the National Bureau of Statistics said on Friday.
While the services PMI held above the 50 level that indicates expansion, slackening growth mirrors a fourth-quarter cooldown in factory activity and the broader economy as credit supply moderated and firms rebuilt inventories more slowly.
Lu Ting, an economist at Bank of America Merrill Lynch in Hong Kong, said another factor was the fading effect of China’s “mini” economic stimulus rolled out in mid-2013 to prop up slowing activity.
“There was pent-up demand in the third quarter, and we don’t expect it to [have been] sustained in the fourth quarter,” he said.
Lu said he expected quarterly growth to ease to 2 per cent in the December quarter from 2.2 per cent in the previous three months.