Ser­vices ac­tiv­ity re­bounds in July

China Daily (Canada) - - FRONT PAGE - By REUTERS

Ac­tiv­ity in China’s ser­vices sec­tor ex­panded at its fastest pace in the 11 months in July, thanks to stronger new busi­ness, a pri­vate sur­vey showed on Wed­nes­day, a welcome de­vel­op­ment at a time fac­to­ries in the world’s sec­ond-largest econ­omy are strug­gling.

The ser­vices Pur­chas­ing Man­agers In­dex, com­piled by Caixin Media Co Ltd and Markit Ltd, rose to 53.8 from June’s 51.8. The July level is the high­est since Au­gust 2014 and marks a 12th straight month of ex­pan­sion.

A read­ing above 50 points in­di­cates growth on a monthly ba­sis.

A sub-in­dex mea­sur­ing new busi­ness jumped to 54 from June’s 52.2 while the em­ploy­ment sub-in­dex also edged up, in­di­cat­ing in­creased hir­ing on stronger new­busi­nesses.

Both in­put prices and selling prices in­creased in July, in­di­cat­ing a slight pickup in in­fla­tion­ary pres­sure.

The Caixin PMI re­port did not spec­ify if there was an im­pact on the ser­vices sec­tor from the crash in the coun­try’s stock mar­kets from mid-June. A sharp rally early in the year had boosted per­for­mance for banks and bro­ker­ages, and gave a much needed lift to the cool­ing econ­omy.

The of­fi­cial ser­vices PMI re­leased on Satur­day showed that ac­tiv­ity quick­ened slightly in July from the pre­vi­ous month.

The rel­a­tively re­silient ser­vices sec­tor could help off­set some down­ward pres­sure on the econ­omy as the man­u­fac­tur­ing sec­tor strug­gles to cope with weaker de­mand at home and abroad.

The fi­nal Caixin/Markit fac­tory sur­vey showed ac­tiv­ity con­tracted the most in two years in July while the of­fi­cial PMI showed man­u­fac­tur­ing growth un­ex­pect­edly stalled.

The of­fi­cial sur­veys fo­cus on large, State-owned firms, while the pri­vate ones mea­sure ac­tiv­ity across small to medium-sized firms, which are fac­ing tougher fi­nan­cial and op­er­at­ing con­di­tions.

The ser­vices sec­tor

has ac­counted for the big­ger part of China’s eco­nomic out­put for at least two years, with its share ris­ing to 48.2 per­cent last year, com­pared with the 42.6 per­cent con­tri­bu­tion from man­u­fac­tur­ing and con­struc­tion.

The gov­ern­ment has taken a se­ries of steps since last year to try to put a floor be­neath sput­ter­ing eco­nomic growth, in­clud­ing ac­cel­er­at­ing in­fra­struc­ture spend­ing and re­peated re­duc­tions in in­ter­est rates and banks’ re­serve re­quire­ment ra­tios. But growth is still ex­pected to mod­er­ate this year to around 7 per­cent, the slow­est in a quar­ter of a cen­tury.

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