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China's service sector growth eases in July, HSBC index shows
By Wang Yanlin |
August 3, 2011, Wednesday
|
Online Edition
Online Edition
GROWTH of China's service sector eased for a second consecutive month in July but service activities were still expanding, a survey showed today.
The HSBC Business Activity Index, a seasonally adjusted gauge of the service sector across the country, stood at 53.5 last month, down from June's 54.1 and May's 54.3. A reading above 50 means expansion and below it indicates contraction.
In comparison, the HSBC Purchasing Managers Index, a composite indicator of operating conditions in the manufacturing sector, dropped to 49.3 in July from June's 50.1. It was the first time in one year that the index fell below 50.
"Service sector activity growth moderated in July, reflecting the effect of credit tightening and measures to cool the property market," said Qu Hongbin, HSBC's chief economist in China. "Despite the slowdown, the service sector continued to expand steadily and will find support from resilient consumer consumption."
Also, the inflationary pressure eased as the component index of average input costs moved at the slowest pace in five months, the survey showed. Although costs were still rising, service providers lifted their output charges only fractionally amid growing competition for new business in the sector, keeping the output charge inflation at a one-year low.
"Combined with waning price pressures in the manufacturing sector, this implies that inflation has reached its peak."
Chinese service providers also expressed continued optimism for short-term business outlook. Their positive sentiment was attributed to expectations of better economic conditions, new product launches and the success of commercial activities, the survey said.
China's gross domestic product expanded 9.6 percent year-on-year in the first six months and is expected to cool further as policymakers continue to make inflation control their top priority in the second half.
The HSBC Business Activity Index, a seasonally adjusted gauge of the service sector across the country, stood at 53.5 last month, down from June's 54.1 and May's 54.3. A reading above 50 means expansion and below it indicates contraction.
In comparison, the HSBC Purchasing Managers Index, a composite indicator of operating conditions in the manufacturing sector, dropped to 49.3 in July from June's 50.1. It was the first time in one year that the index fell below 50.
"Service sector activity growth moderated in July, reflecting the effect of credit tightening and measures to cool the property market," said Qu Hongbin, HSBC's chief economist in China. "Despite the slowdown, the service sector continued to expand steadily and will find support from resilient consumer consumption."
Also, the inflationary pressure eased as the component index of average input costs moved at the slowest pace in five months, the survey showed. Although costs were still rising, service providers lifted their output charges only fractionally amid growing competition for new business in the sector, keeping the output charge inflation at a one-year low.
"Combined with waning price pressures in the manufacturing sector, this implies that inflation has reached its peak."
Chinese service providers also expressed continued optimism for short-term business outlook. Their positive sentiment was attributed to expectations of better economic conditions, new product launches and the success of commercial activities, the survey said.
China's gross domestic product expanded 9.6 percent year-on-year in the first six months and is expected to cool further as policymakers continue to make inflation control their top priority in the second half.
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