Services shine in slowdown
By Wang Yanlin |
July 6, 2011, Wednesday
|
Print Edition
Print Edition
CHINA'S service sector outshone the manufacturing industry last month as it was less hard hit by tightening measures and boosted by the star role services play in the country's economic restructuring.
The HSBC Business Activity Index, a seasonally adjusted gauge of the services sector across the country, dipped slightly to 54.1 points in June from 54.3 the previous month.
In comparison, the HSBC Purchasing Managers' Index, which measures the vitality of industrial activities, fell to an 11-month low of 50.1 points in June, nearly touching 50 points which separate expansion from contraction.
Services' more upbeat performance was bolstered by growing new orders and better employment in the sector, the survey showed. But China's tightening monetary measures also took its toll on service growth, albeit less so than in the manufacturing sector.
"The continuous steady 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 China economist at HSBC.
Surveyed services sector firms, including those in finance, architecture, logistics and design, said they remain optimistic over future prospects. However, the degree of optimism was at its lowest since data were first compiled in November of 2005.
Qu said the relatively good sentiment among service firms may provide room for policy makers to keep the current tightening measures for another two to three months.
China introduced the tightening monetary policy stance in October last year to tame price rises. The 10-month ordeal, especially for cash-strapped smaller firms, has triggered concerns that the fight against inflation may curb China's economic growth.
China is likely to raise its interest rate again this week after the central bank said on Monday that inflationary pressure remains high, Economic Information Daily said.
China's economic growth may ease to 9.5 percent in the first half and continue to slow to 9.3 percent for the whole of 2011, the State Information Center forecast last week.
The HSBC Business Activity Index, a seasonally adjusted gauge of the services sector across the country, dipped slightly to 54.1 points in June from 54.3 the previous month.
In comparison, the HSBC Purchasing Managers' Index, which measures the vitality of industrial activities, fell to an 11-month low of 50.1 points in June, nearly touching 50 points which separate expansion from contraction.
Services' more upbeat performance was bolstered by growing new orders and better employment in the sector, the survey showed. But China's tightening monetary measures also took its toll on service growth, albeit less so than in the manufacturing sector.
"The continuous steady 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 China economist at HSBC.
Surveyed services sector firms, including those in finance, architecture, logistics and design, said they remain optimistic over future prospects. However, the degree of optimism was at its lowest since data were first compiled in November of 2005.
Qu said the relatively good sentiment among service firms may provide room for policy makers to keep the current tightening measures for another two to three months.
China introduced the tightening monetary policy stance in October last year to tame price rises. The 10-month ordeal, especially for cash-strapped smaller firms, has triggered concerns that the fight against inflation may curb China's economic growth.
China is likely to raise its interest rate again this week after the central bank said on Monday that inflationary pressure remains high, Economic Information Daily said.
China's economic growth may ease to 9.5 percent in the first half and continue to slow to 9.3 percent for the whole of 2011, the State Information Center forecast last week.
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