China’s Services Sector Growth Slows: Caixin Survey
China’s services sector expanded at a slower pace in May as new business growth softened, a Caixin survey showed Wednesday.
The Caixin China General Services Business Activity Index, which provides a snapshot of operating conditions in the country’s services sector, fell to 52.7 in May from a 15-month high of 54.5 in April. A reading above 50 indicates expansion, while anything below that signals a contraction.
The slower growth in the services sector dragged down the Caixin China Composite Output Index, covering both manufacturers and service providers, to 51.5 in May from 52.7 in the previous month.
“Overall, China’s economic growth showed some signs of slowing in May. Employment and business confidence, in particular, merit policymakers’ attention,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, an affiliate of Caixin Global.
The State Council formed a leading group on May 22 to guard against unemployment and other issues.
New services sector business growth remained strong, but slowed, according to the survey, while new export business edged up only marginally, with growth slowing significantly from the previous month.
Employment growth in services companies slowed from the past month’s high, while business expectations, although staying in positive territory, dropped to their lowest level since July 2018.
The employment sub-index of China’s official non-manufacturing PMI, released Friday by National Bureau of Statistics, stood at 48.2 in May, the lowest since March 2016.
The growth of both input costs and prices charged by services slowed, but input costs’ growth outpaced the growth of prices charged, suggesting services companies remained “under significant pressure,” Zhong said.
The services sector, also known as the tertiary sector, includes finance, real estate services, marketing, transportation and retailing.
Policymakers count on the services sector to create jobs as it’s more labor-intensive than manufacturing.
Contact reporter Liu Jiefei (firstname.lastname@example.org)
Read more about Caixin’s economic indexes.
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