Jan 05, 2017 09:49 AM

Service Sector Growth Highest in 17 Months: Caixin Survey

(Beijing) – Growth in China’s service activity accelerated to its strongest rate in 17 months in December, with companies optimistic about prospects in 2017 on anticipated improvements in market conditions, a survey sponsored by Caixin showed Thursday.

The Caixin General Services Purchasing Managers’ Index (PMI) edged up to 53.4 last month from 53.1 in November. The previous high was 53.8 in July 2015.

A reading above 50 indicates expansion, while anything below that points to contraction.

Demand continued to pick up as new orders at services companies rose in December at the fastest pace in 17 months, according to the survey. Employers also hired more people, although the increase was the slowest in three months, it showed.

Service providers raised their prices only marginally in December due to market competition pressures, while rising raw-material costs caused input expenses to soar at their quickest rate in nearly two years.

The degree of optimism about growth prospects in 2017 reached a four-month high, with confidence boosted by forecasts of improving market conditions and company expansion, the survey indicated.

Business activity picked up steam across the board at the year end.

The Caixin China General Manufacturing Purchasing Managers’ Index (PMI) for December, released on Tuesday, came in at 51.9, rising from 50.9 in November and the best performance since January 2013.

The strong performance in the two sectors brought the Caixin Composite Output Index, which reflects the health of both manufacturing and service industries, to 53.5, a 45-month high, according to the survey.

Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group, said the December figures showed recovery in the Chinese economy continued and there was no question that the government’s growth target of 6.5%-7% for this year can be achieved.

But he also warned that it was unclear if the country can create growth drivers powerful enough to offset the impact from gradually tightening property policies and likely slowing expansion in fiscal and monetary policies.

“We have to stay vigilant over the downward pressures on the economy,” he said.

The government on Sunday released its non-manufacturing business activity index, which was slightly down to 54.5 last month from 54.7 in November, affected by reduced work in sectors including property and capital market services.

Contact reporter Fran Wang (

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