Update | Growth in China’s services sector slows but new orders on the rise
A non-government survey reported softer growth in April for the services sector, an area on which the country has pinned hopes of reversing a slowdown in economic growth.
The Caixin China General Services PMI (Purchasing Managers’ Index), produced by financial information service provider Markit and sponsored by Caixin Media, was 51.8 in April, down 0.4 from March, according to figures released yesterday. A reading above 50 indicates expansion, while below 50 represents contraction.
But the April data also showed the fastest growth in new orders in three months.
Covering more smaller, private firms than the official PMI, the Caixin index is based on data collected monthly from purchasing executives at more than 400 companies.
Hong Kong stocks down again on slowing growth in mainland China services sector
The data came as the state planner said in a statement that economic activity steadied in the first quarter.
The National Development and Reform Commission said on its website that industrial profits in the southern province of Guangdong and southwest metropolis of Chongqing rose more than 20 per cent in the first quarter, fuelled by industries including cars and electronics.
Consumption also picked up, with tourism revenue increasing by more than 30 per cent during the Lunar New Year in Shanxi and Guizhou provinces compared to the same time last year, and Shanghai seeing about 20 per cent growth in the entertainment and fitness sector, it said.
Bank of Communications chief economist Lian Ping said that despite the softened growth, it was unlikely that the service sector would encounter major fluctuations as it was less sensitive to policy factors than other sectors, such as manufacturing.
“To a large extent, expansion in services, behind which were fair employment and rises in salaries, was the reason why China’s economic growth has remained above 6.5 per cent,” he said.
China’s economy grew 6.9 per cent in 2015, its weakest pace in a quarter of a century. In the first quarter of 2016, the economy grew 6.7 per cent year-on-year – the slowest pace since the global financial crisis.
Additional reporting by Reuters
