China’s service sector slows in August, hitting lowest level in over year
Government relying on growth in services and consumption to rebalance nation’s economy away from its reliance on heavy industry and cheap manufacturing
Growth in China’s services sector slowed in August, hitting the lowest level since May 2016, an official survey showed on Thursday.
In contrast, the survey on manufacturing sector growth accelerated unexpectedly last month, defying expectations.
The official non-manufacturing Purchasing Managers’ Index fell to 53.4, from 54.5 in July, raising fresh questions about the health of China’s services sector.
The Manufacturing Purchasing Managers’ Index stood at 51.7 in August, the China Logistics Information Centre said on its website. That was up from the previous month’s 51.4 and well above the 50-point mark that separates growth from contraction on a monthly basis.
Analysts surveyed by Reuters had forecast the reading would come in at 51.3, easing only marginally from July.
The services sector accounts for over half of China’s economy, with rising wages giving Chinese consumers the opportunity to shop and travel more.
China’s leaders are counting on growth in services and consumption to rebalance their economic growth model from its heavy reliance on investment and exports.
China posted stronger-than-expected economic growth of 6.9 per cent in the first half of the year, fuelled by a year-long construction boom, resurgent exports and robust retail sales.
But economists have expected the pace to slow slightly in the second half due to higher financing costs, a regulatory clampdown on riskier lending and some signs of moderation in the red-hot housing market.