Growth in China’s service sector cools to three-month low, survey suggests
The growth rate in China’s service sector fell to a three-month low in May, according to a survey released on Friday, denting hopes that the nation’s slowing economy is gradually gathering steam.
The Caixin/Markit services purchasing managers’ index fell to 51.2 last month from 51.8 in April. A reading above 50 signals growth in activity.
Job creation in the service sector rose for the second month in May, but the level of employment remained weak, Caixin said.
The report said some services companies had suspended hiring as the manufacturing sector also sees a further reduction in jobs.
Beijing has taken efforts to boost the services sector, hoping it can offset weakening manufacturing.
The government is attempting to reduce overcapacity in areas such as coal and steel, while reshaping the nation’s model for economic growth towards higher tech and more sustainable industries.
A slowdown in the services industries would post a challenges for top policymakers who count on the sector to sustain a large labour force.
Caixin said the business outlook in the service sector over the next 12 months has fallen to the lowest level this year.
Despite a number of firms expecting improvements in demand and business expansion, an unclear outlook weighed on overall business confidence, the report said.
The figures in Friday’s private survey were in line with Monday’s official figures which showed the services PMI fell to 53.1 in May from April’s 53.5.
The manufacturing sector PMI released by Caixin/Markit on Monday dipped further last month, down to 49.2 from April’s 49.4. The official manufacturing PMI remained unchanged at 50.1.
As a result, the Caixin China Composite Output Index, covering both services and manufacturing, fell to 50.5 last month from 50.8 in April, the second consecutive monthly decline.
“Underlying structural changes are still going on, with the manufacturing sector shrinking and services expanding,” said Zhong Zhengsheng, an economist with the CEBM Group.
“The government needs to continue to push forward stabilising measures to help the economy recover.
“It should also relax the control and regulation of the services sector to enable it to realise its growth potential and to facilitate the transformation and healthy development of the economy,” he said.
