China Services Activity Grows at Slowest Pace in a Year, Caixin PMI Shows

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Activity in China’s services sector grew at the slowest pace in a year in September as market optimism weakened, according to a Caixin-sponsored survey published Monday.

The Caixin China General Services Business Activity Index, which provides an independent snapshot of operating conditions in industries such as retail and tourism, came in at 50.3 in September, down 1.3 points from the previous month.

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China’s services sector growth slowed in September, with the Caixin China Services PMI dropping to 50.3.
Demand growth decelerated while external demand increased; employment saw a slight rise, leading to increased backlogs.
The People’s Bank of China cut the reserve requirement ratio by 50 basis points, injecting 1 trillion yuan to stimulate the economy amidst declining market optimism.

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Who’s Who

Caixin Media: Caixin Media, a China-based media group, provides in-depth analysis and independent reporting on various economic and financial issues. It sponsors the Caixin China General Services Business Activity Index, which tracks operating conditions in the services sector. The company publishes economic data and insights, offering critical indicators like the Caixin China services PMI to gauge the performance of China's economy. Their reports are pivotal for understanding market trends and economic health.

Capital Economics Ltd.: Capital Economics Ltd. is referenced in the article through Julian Evans-Pritchard, head of China economics at the firm. He noted that while the People's Bank of China's recent 50-basis-point cut in banks' reserve requirement ratio is a positive step, it is likely insufficient to drive a turnaround in growth without additional fiscal support.

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What Happened When

August 2024：: The survey showed both the Caixin China General Services Business Activity Index and the Caixin China General Composite PMI were higher in August 2024 compared to September 2024. Employment fell into contraction during this month.

Tuesday September 24, 2024：: A slew of stimulus measures was announced in a bid to boost the economy.

Friday September 27, 2024：: The People’s Bank of China made a 50-basis-point cut in banks’ reserve requirement ratio, pumping approximately 1 trillion yuan ($142.6 billion) of long-term funding into the financial market.

September 2024：: The Caixin China services PMI fell to 50.3, the lowest in a year, and the Caixin China General Composite PMI also fell to 50.3. External demand growth reached the highest level in the third quarter, and there was an uptick in backlogs of work.

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