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Service firms report slower business in June
By Wang Yanlin |
July 4, 2012, Wednesday
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Online Edition
Online Edition
CHINA'S non-manufacturing activities in private and export-oriented companies eased in June due to weaker expansion of new orders, an HSBC survey showed this morning.
The headline Business Activity Index, produced by the HSBC and Markit Economics to weigh performance of private and export-oriented service companies, softened to 52.3 last month from May's 54.7, which was a 19-month high.
A reading above 50 means expansion while the opposite points to contraction.
The latest index reading, which remained above the neutral threshold, still indicated a rise in service activities, the bank said.
However, it signaled alert as smaller companies are usually more sensitive to market changes which may spread to large companies later, said Qu Hongbin, chief economist for China at HSBC.
"Service activities softened in June due to slowing new business flows, which translated into only marginal growth of employment," Qu said. "This, plus the ongoing slowdown of manufacturing sectors, points to growing pressures on the jobs market -- the last thing Chinese policymakers want to see."
The component indices showed that new business grew at the slowest pace since August 2011, indicating much weaker demand for services.
Luckily, inflation is also falling fast and Beijing has sufficient room to step up easing and revive domestic demand, Qu added.
Contrary to the conditions in private and export-oriented companies, state-owned enterprises reported improved performance in June.
The official non-manufacturing Purchasing Managers' Index, which is slanted toward state-owned service companies, rose to 56.7 last month, up from May's 55.2 and April's 56.1, the National Bureau of Statistics said on Tuesday.
The headline Business Activity Index, produced by the HSBC and Markit Economics to weigh performance of private and export-oriented service companies, softened to 52.3 last month from May's 54.7, which was a 19-month high.
A reading above 50 means expansion while the opposite points to contraction.
The latest index reading, which remained above the neutral threshold, still indicated a rise in service activities, the bank said.
However, it signaled alert as smaller companies are usually more sensitive to market changes which may spread to large companies later, said Qu Hongbin, chief economist for China at HSBC.
"Service activities softened in June due to slowing new business flows, which translated into only marginal growth of employment," Qu said. "This, plus the ongoing slowdown of manufacturing sectors, points to growing pressures on the jobs market -- the last thing Chinese policymakers want to see."
The component indices showed that new business grew at the slowest pace since August 2011, indicating much weaker demand for services.
Luckily, inflation is also falling fast and Beijing has sufficient room to step up easing and revive domestic demand, Qu added.
Contrary to the conditions in private and export-oriented companies, state-owned enterprises reported improved performance in June.
The official non-manufacturing Purchasing Managers' Index, which is slanted toward state-owned service companies, rose to 56.7 last month, up from May's 55.2 and April's 56.1, the National Bureau of Statistics said on Tuesday.
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