Surveys cause some puzzlement
Print Edition
China’s service activity regained some momentum in February when the manufacturing sector continued to slow, an indication of China’s efforts to restructure the economy but also causing some puzzlement, two separate surveys showed yesterday.
The official non-manufacturing Business Activity Index, a gauge of operating conditions in service companies, added 1.6 points from a month earlier to a three-month high of 55 in February, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
Meanwhile, the HSBC Purchasing Managers’ Index, which measures vitality in mostly private manufacturing companies, fell to 48.5 last month from 49.5 in January but better than the preliminary reading of 48.3, said HSBC Holdings Plc and research firm Markit.
It was the second month the HSBC PMI had fallen below the threshold of 50 which points to contraction. The official PMI, which is slanted toward state-owned manufacturers and was released on Saturday, dropped to an eight-month low of 50.2.
Qu Hongbin, chief economist for China at HSBC, said the final readings confirmed the weakness of manufacturing growth in the world’s second-largest economy.
“Signs become clear that risks to GDP growth are tilting to the downside,” Qu said. “This calls for policy fine-tuning measures to stabilize market expectations and steady the pace of growth in the coming quarters.”
However, the improved service figures, along with surprisingly good trade, foreign investment and credit data results in January, cast the situation in a different light.
Li Maoyu, an analyst at Changjiang Securities Co, said the divided figures were a reflection of China’s efforts in economic restructuring.
“China has strengthened efforts to upgrade its economic structure, moving away from relying too much on low-end manufacturing,” Li said.
New orders in the service sector gained 0.5 point to 51.4 last month, while prices fell 1.1 points to 49. Business expectations rose to 59.9 after falling for two straight months, up from January’s 58.1.
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