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China's service industry growth slowest in 6 years
By Wang Yanlin |
September 5, 2011, Monday
|
Online Edition
Online Edition
CHINA'S service sector grew at its slowest pace in nearly six years amid a cooling economy, an HSBC report showed today.
The HSBC Business Activity Index, a seasonally adjusted gauge of the service sector in China, fell notably from July's 53.5 to a series-record low of 50.6 last month, signaling only a marginal expansion of service sector activities.
The bank has compiled this index since November 2005. A reading above 50 indicates expansion, and readings below 50 means contraction.
"Slowing new business inflows drove the HSBC China Services PMI reading to a record low," said Qu Hongbin, chief economist for China at HSBC. "This reflects the effect of property and credit tightening measures."
The report said an increase of service output subdued last month because of a further slowdown in new business growth and, in some cases, state-led policies aimed at cooling the property sector.
On the price side, average cost burdens continued to rise markedly in August, primarily reflecting pressure from higher salary payments.
Despite weakness in activity and demand, the survey highlighted an increase in service sector business confidence.
"The degree of optimism rose to the highest in four months," the report said. "The confidence was supported by expectations of new product launches and the success of commercial activities."
Qu also said China's service sector was likely to see a moderation in growth, instead of a meltdown, as credit tightening may have approached an end.
To compare, the HSBC Purchasing Managers' Index, a composite indicator of operating conditions in the manufacturing sector, rebounded to 49.9 in August from July's 49.3.
The HSBC Business Activity Index, a seasonally adjusted gauge of the service sector in China, fell notably from July's 53.5 to a series-record low of 50.6 last month, signaling only a marginal expansion of service sector activities.
The bank has compiled this index since November 2005. A reading above 50 indicates expansion, and readings below 50 means contraction.
"Slowing new business inflows drove the HSBC China Services PMI reading to a record low," said Qu Hongbin, chief economist for China at HSBC. "This reflects the effect of property and credit tightening measures."
The report said an increase of service output subdued last month because of a further slowdown in new business growth and, in some cases, state-led policies aimed at cooling the property sector.
On the price side, average cost burdens continued to rise markedly in August, primarily reflecting pressure from higher salary payments.
Despite weakness in activity and demand, the survey highlighted an increase in service sector business confidence.
"The degree of optimism rose to the highest in four months," the report said. "The confidence was supported by expectations of new product launches and the success of commercial activities."
Qu also said China's service sector was likely to see a moderation in growth, instead of a meltdown, as credit tightening may have approached an end.
To compare, the HSBC Purchasing Managers' Index, a composite indicator of operating conditions in the manufacturing sector, rebounded to 49.9 in August from July's 49.3.
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