Non-manufacturing PMI stabilizes in July
Print Edition
China’s service sector reported unchanged growth momentum in July, a survey showed yesterday. Despite little improvement, it still defied cooling manufacturing activity in the world’s second-largest economy.
The HSBC China Services Business Activity Index, a gauge of operational conditions in service companies weighted toward private firms, stood at 51.3 last month, the same as that in June, according to HSBC Holdings Plc and consulting firm Markit.
A reading above 50 means expansion, and the latest index signalled a further modest increase in business activity in China’s service sector, the bank said.
The component indices showed that new orders grew at the fastest pace since March, boosted by greater client demand.
“China’s service sector has stabilized at a relatively low level of growth,” said Qu Hongbin, chief economist for China at HSBC, pointing out that the profit margin remained squeezed and “without a sustained improvement in demand, service sector growth is likely to stay lackluster, putting downside pressure on employment growth”.
The survey found staffing levels declined for the fourth straight month in July. Although the rate of job shedding was only slight, it was the strongest reduction in more than four years.
Conditions at large state-owned companies in the service sector was better. The Purchasing Managers’ Index for the non-manufacturing sector, compiled by the China Federation of Logistics and Purchasing which is slated toward SOEs, rebounded to 54.1 in July, up from 53.9 in June, the federation said on Saturday.
Both figures defied the situation in the manufacturing sector. The HSBC PMI, released last Thursday, dropped to an 11-month low of 47.7 in July.
China’s economy has been stuck in a weak recovery, easing to a 7.5 percent growth in the second quarter from 7.7 percent in the first three months.
Financial markets have grown increasingly nervous about China’s economic health, although the authorities have promised to keep the country on track to meet its growth target of 7.5 percent for this year.
The weaker-than-expected economic growth in China has triggered calls for restrictive policies to be lifted, especially in recent months as inflation eased and some financial institutions lowered their projections showing less confidence.
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