Caixin Services Sector Index Edges Down to 53.1 in Jan.
(Beijing) – Growth in China’s service sector lost momentum at the start of 2017 as new orders increased at a slower pace than that in December 2016, a survey sponsored by Caixin showed on Monday.
The Caixin China General Services Business Activity Index fell to 53.1 in January from December’s 17-month high of 53.4, according to the survey.
A reading above 50 indicates expansion, while anything below that points to contraction.
New service business continued to rise rapidly, but the rate of expansion declined from that seen at the end of 2016, according to the survey, which is based on data compiled from monthly replies to questionnaires sent to purchasing executives in more than 400 companies.
The service sector data came after figures released on Friday showed the Caixin China General Manufacturing Purchasing Managers’ Index (PMI) dropped to 51.0 last month, down from 51.9 in December, mainly on weakened growth in domestic demand.
The slower increases in both manufacturing and services activity at the beginning of the year led the Caixin China Composite Output Index to decrease to 52.2 in January from 53.5 in the previous month, marking the lowest increase since September 2016.
“The economy is unlikely to maintain the pace of expansion seen in the fourth quarter of last year given that the manufacturing sector’s willingness to restock has declined,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group.
The Chinese economy grew by a stronger-than-expected 6.8% in the last three months of 2016, picking up from a gain of 6.7% in the January-September period.
“China’s economic growth may decelerate after the first quarter of this year,” Zhong said.
Services companies looked to have been the main support in the job market, with payroll increases in the sector reaching the quickest since May 2015.
As a result, employment at the composite level stabilized in January following 19 straight months of decrease in the number of people employed, despite goods producers recording the most marked decline in workforce numbers for three months.
Both service providers and manufacturers are facing intensified inflationary pressures, with services companies reporting the sharpest increases in input costs in nearly four years and prompting them to raise prices further.
The government last week published its non-manufacturing business activity index, which edged up to 54.6 last month from 54.5 in December, boosted by strong growth in industries including transportation, postal services, hotels, the internet and financial services.
Contact reporter Fran Wang (firstname.lastname@example.org)
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