Growth in service sector picking up pace
Print Edition
GROWTH in China’s service sector in June accelerated the fastest in nearly a year, supporting economic growth as manufacturing weakened, according to a survey by financial information service provider Markit and sponsored by Caixin Media.
The Caixin Business Activity Index rose to 52.7 in June, its highest point since July 25.
That compared to May’s 51.2 and 51.8 in April. A reading above 50 indicates expansion.
The sub components of the index showed that faster growth in new business underpinned a stronger increase in business activity as new orders growth rate was an 11-month high.
Employment in the sector rose for the third month in a row, although the rate of job creation was smaller than in the two previous months.
Meanwhile, companies continued to be cautiously optimistic about the 12-month business outlook, with the level of positive sentiment unchanged from May’s five-month low.
“Service sector growth is now supporting the overall economy, and the expansion for services is coming at a time when the manufacturing index is contracting, suggesting the nation’s economic structure is becoming more balanced,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group. “The government must continue to relax service sector controls to encourage its development and push forward the nation’s economic transformation.”
Released last Friday, the Caixin China Purchasing Managers’ Index, an indicator of manufacturing activity, fell to a four-month low of 48.6 in June from 49.2 in May, below the neutral 50 mark for the 15th successive month.
The official manufacturing PMI edged down to the neutral reading of 50 in June, ending three months of expansion, while the non-manufacturing PMI rose to 53.7 from May’s 53.1 points, reversing declines in the previous two months.
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