Oct 08, 2019 09:45 AM

China’s Services Activity Expands at Weakest Pace in 7 Months: Caixin PMI

Housekeepers clean on Aug. 30 in Shexiang Ancient Town, Bijie, Southwest China's Guizhou province. Photo: IC Photo
Housekeepers clean on Aug. 30 in Shexiang Ancient Town, Bijie, Southwest China's Guizhou province. Photo: IC Photo

China’s services sector expanded at the slowest rate in seven months in September, even as new business increased at the fastest pace in 20 months, a survey showed Tuesday.

The Caixin China General Services Business Activity Index, which provides a snapshot of operating conditions in the country’s services sector, fell to 51.3 in September from 52.1 in the previous month. A reading above 50 indicates expansion, while anything below that signals a contraction.

The Caixin China Composite Output Index, which covers both manufacturers and service providers, inched up to 51.9 in September from 51.6 in the previous month, in part driven by faster growth in the manufacturing sector.

“China’s economy showed signs of marginal recovery in September, as the labor market improved and domestic demand increased at a faster pace,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group Ltd., an affiliate of Caixin Global. “After a fast slowdown in previous quarters, China’s economic growth began to show signs of stability.”

Total new business orders placed with services providers rose in September at the fastest pace since January 2018, driven by new products and firmer customer demand, according to the survey. New export business expanded at a slower pace than the previous month. This reflected that growth in new business was mainly driven by domestic demand, Zhong said.

The gauge for services sector employment climbed to a level not been seen since January 2017. Some companies said they were expanding their workforce on the back of rising sales.

Input costs for service providers increased at the fastest pace in a year. Zhong said the rise was mainly driven by rising costs of labor, fuel and raw materials. The measure for prices which services providers charged dropped marginally, although it remained in expansionary territory.

The measure for business activity expectations in the services sector dropped from the previous month. Zhong attributed subdued expectations to fluctuations in exchange rates, as well as rising costs of labor and raw materials.

The services sector, also known as the tertiary sector, includes finance, real estate services, marketing, transportation and retailing. In the first half of this year, the sector accounted for nearly 55% (link in Chinese) of China’s GDP.

Contact reporter Liu Jiefei (

Read more about Caixin’s economic indexes.

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