Expansion of China's service sector weakens
By Wang Yanlin |
February 4, 2012, Saturday
|
Print Edition
Print Edition
GROWTH in China's non-manufacturing activities weakened in January because of higher costs for services during the Chinese New Year holiday and fewer property transactions resulting from a real estate market correction.
The official non-manufacturing Purchasing Managers Index, an indicator of service industry vitality, scaled back to 52.9 last month from December's 56, the China Federation of Logistics and Purchasing said yesterday.
A reading above 50 means expansion, while one below 50 indicates contraction.
"Consumer demand for services remained robust in January, but higher prices refrained them from unscrupulous spending. New orders and new export orders both fell," said Cai Jin, vice president of the federation.
But Cai said further reform and more favorable taxation policies would promote stable growth in the service industry as well as in consumer demand.
The federation's report, based on a survey of about 1,200 companies in 20 non-manufacturing industries, showed the input price index of service providers rose to 58.6 in January, 1.2 points higher than a month earlier. Industries such as accommodation, catering, railway transport and aviation charged much more compared with December.
The real estate industry index continued to retreat amid a cooling property market, the report showed.
In comparison, the headline Business Activity Index, compiled by HSBC to gauge China's service sector, was unchanged at 52.5 in January from December, signaling a solid expansion of business activities in the sector.
Qu Hongbin, chief economist for China at HSBC, however, warned about the potential risks of higher labor costs in China.
"Overall economic growth remained relatively weak, which will inevitably weigh on the job market if the weakness persists for longer," Qu said. "With inflation on track to ease further, China's policymakers still have ample room for more policy easing measures to ensure a soft landing."
Qu suggested another reserve requirement ratio cut to bolster liquidity.
The official non-manufacturing Purchasing Managers Index, an indicator of service industry vitality, scaled back to 52.9 last month from December's 56, the China Federation of Logistics and Purchasing said yesterday.
A reading above 50 means expansion, while one below 50 indicates contraction.
"Consumer demand for services remained robust in January, but higher prices refrained them from unscrupulous spending. New orders and new export orders both fell," said Cai Jin, vice president of the federation.
But Cai said further reform and more favorable taxation policies would promote stable growth in the service industry as well as in consumer demand.
The federation's report, based on a survey of about 1,200 companies in 20 non-manufacturing industries, showed the input price index of service providers rose to 58.6 in January, 1.2 points higher than a month earlier. Industries such as accommodation, catering, railway transport and aviation charged much more compared with December.
The real estate industry index continued to retreat amid a cooling property market, the report showed.
In comparison, the headline Business Activity Index, compiled by HSBC to gauge China's service sector, was unchanged at 52.5 in January from December, signaling a solid expansion of business activities in the sector.
Qu Hongbin, chief economist for China at HSBC, however, warned about the potential risks of higher labor costs in China.
"Overall economic growth remained relatively weak, which will inevitably weigh on the job market if the weakness persists for longer," Qu said. "With inflation on track to ease further, China's policymakers still have ample room for more policy easing measures to ensure a soft landing."
Qu suggested another reserve requirement ratio cut to bolster liquidity.
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