China’s service sector growth slows to lowest level in four months as trade war hits orders, sentiment
- Caixin/Markit services purchasing managers’ index (PMI) fell to 52.0 in June from 52.7 in May, indicating further pressure on Chinese firms
- Impact on exporters remains despite President Xi Jinping and US counterpart Donald Trump agreeing to a trade war truce at the G20 summit in Japan
Chinese service sector activity slowed to its lowest growth rate in four months in June as export orders and market sentiment were hit by ongoing trade tensions with the United States, according to a private survey released on Wednesday.
The Caixin/Markit services purchasing managers’ index (PMI), which tends to include more small, private sector firms than the official survey released by the government, fell to 52.0 in June from 52.7 in May and was lower than the market expectation for small decline to 52.6.
Zhong Zhengsheng, research head of CEBM Group, a subsidiary of Caixin, said foreign demand was subdued in June as new export business fell back into contractionary territory. But, he said, this was partly offset by the acceleration of fiscal policy support, as Beijing cut taxes and fees, provided more financing support for small businesses while also accelerating government spending on infrastructure.
The country’s service sector has held up relatively well compared to manufacturers, who have been hit hard by the US tariff increase on US$200 billion worth of Chinese goods announced in May. The impact on exporters remains despite President Xi Jinping and US counterpart Donald Trump agreeing a tariff truce on the remaining US$300 billion of Chinese imports into the US.