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China's services sector outperforms manufacturing in June
By Wang Yanlin |
July 5, 2011, Tuesday
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Online Edition
Online Edition
CHINA'S services sector performed better than the manufacturing industry in June as it was less bruised by the tightening measures and was given priority in economic restructuring.
The HSBC Business Activity Index, a seasonally adjusted gauge of the services sector across the country, stood at 54.1 in June, down slightly from 54.3 in the previous month, a survey by the bank said today.
By comparison, the HSBC Purchasing Managers Index, which measures the vitality of industrial activities, fell to an 11-month low of 50.1 in June, very close to the reading of 50 which separates expansion from contraction.
The services sector performance was bolstered by growing new orders and improved employment, the survey said. But China's tightening monetary policy also took toll on its growth.
"The sustained expansion of services, in particular the notable improvement in employment, should lend support to economic growth, given that services now accounts for 43 percent of China's gross domestic product," said Qu Hongbin, chief economist of China at HSBC.
Surveyed firms, including those in finance, architecture, logistics and designing, said they remain optimistic about the future. However, their degree of optimism was the lowest since data were first compiled in November 2005.
Qu said the relatively good sentiments in the services sector may provide room for policymakers to keep the current tightening measures for another two to three months.
China introduced the tightening monetary policy in October last year to tame inflation. The ten-month ordeal, especially for cash-stripped smaller firms, has triggered concerns that this fight against inflation may curb China's economic growth.
China is likely to raise the interest rate again this week after the central bank said yesterday that inflationary pressure remains high, according to the Economic Information Daily.
If so, it will be China's third interest rate hike since last October, along with 12 reserve requirement ratio increases that require banks to put aside a percentage of money as reserves.
China's economic growth may weaken to 9.5 percent in the first half of this year and to 9.3 percent for the whole year, the State Information Center forecasted last week. Last year, the country's GDP growth rate settled at 10.3 percent.
The HSBC Business Activity Index, a seasonally adjusted gauge of the services sector across the country, stood at 54.1 in June, down slightly from 54.3 in the previous month, a survey by the bank said today.
By comparison, the HSBC Purchasing Managers Index, which measures the vitality of industrial activities, fell to an 11-month low of 50.1 in June, very close to the reading of 50 which separates expansion from contraction.
The services sector performance was bolstered by growing new orders and improved employment, the survey said. But China's tightening monetary policy also took toll on its growth.
"The sustained expansion of services, in particular the notable improvement in employment, should lend support to economic growth, given that services now accounts for 43 percent of China's gross domestic product," said Qu Hongbin, chief economist of China at HSBC.
Surveyed firms, including those in finance, architecture, logistics and designing, said they remain optimistic about the future. However, their degree of optimism was the lowest since data were first compiled in November 2005.
Qu said the relatively good sentiments in the services sector may provide room for policymakers to keep the current tightening measures for another two to three months.
China introduced the tightening monetary policy in October last year to tame inflation. The ten-month ordeal, especially for cash-stripped smaller firms, has triggered concerns that this fight against inflation may curb China's economic growth.
China is likely to raise the interest rate again this week after the central bank said yesterday that inflationary pressure remains high, according to the Economic Information Daily.
If so, it will be China's third interest rate hike since last October, along with 12 reserve requirement ratio increases that require banks to put aside a percentage of money as reserves.
China's economic growth may weaken to 9.5 percent in the first half of this year and to 9.3 percent for the whole year, the State Information Center forecasted last week. Last year, the country's GDP growth rate settled at 10.3 percent.
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