Service PMI improves but outlook worrying
Print Edition
CHINA’S service activity improved slightly in November even as the world’s second-largest economy continued to slow, according to official data yesterday.
The official non-manufacturing Purchasing Managers’ Index, a gauge of operating conditions in the service sector geared toward state-owned companies, added 0.1 point from October to 53.9 last month, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
The November reading pointed to growth picking up for the first time in three months. A reading above 50 means expansion.
Employment, which added 0.6 points to 49.5 last month, was the main component driving the PMI. However, the sub-indices for new orders, prices and business activities were either flat or grew slower.
Meanwhile, the HSBC China Services Business Activity Index, a similar gauge for private service companies, also rose 0.1 point from October to 53 last month, said HSBC Holdings Plc and research firm Markit.
“The shopping frenzy during the Singles Day promotion was an important source of last month’s growth” and boosted business for logistics and finance firms, said Xu Jun, an analyst at CITIC Securities Co.
Alibaba’s Tmall, China’s biggest online platform for branded products, posted sales of 57.1 billion yuan (US$9.3 billion) on November 11 — dubbed Singles Day — which resulted in 278 million orders for delivery.
Qu Hongbin, HSBC’s chief economist for China, pointed out the service sector grew very marginally in November.
“We expect the central bank’s recent rate cuts will help stabilize demand in the near term,” Qu said. “However, downside pressures on the economy still persist and warrant further monetary and fiscal easing measures in the coming months.”
However, Wang Yong, a professor with a training center under the central bank, said on Tuesday that China should not rely too much on monetary easing to stimulate growth.
“The country should pay more attention to the fundamentals and sustain the growth momentum through a better economic and industrial structure,” Wang said.
The International Monetary Fund predicted China’s growth at 7.4 percent this year — the slowest rise in 24 years.
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