Services growth remains stable

Caixin PMI for key sector rises to 52.7, its highest level in 3 months

China’s service sector growth, measured by a major purchasing managers’ index, accelerated in August, hitting a three-month high, according to a private survey issued on Tuesday. Officials and economists said the country’s third-quarter growth is expected to remain stable.

The Caixin Services Purchasing Managers’ Index rose to 52.7 in August, up from 51.5 in July, according to a survey conducted by financial information service provider Markit and sponsored by Caixin Media.

A reading above 50 indicates expansion and one below it indicates contraction.

The Caixin PMI for manufacturing and services combined stood at 52.4 last month, the highest in six months, up from 51.9 in July.

Caixin said that increases in the sub-index for new orders registered the fastest growth in three months, and respondents said in the survey that improving market conditions contributed to the growth.

“The recovery in both manufacturing and services has led the economic outlook to continue to improve,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group.

But he warned that the country should pay attention to whether the rising input costs will bring profit-making and inflationary pressure on businesses and the economy as a whole.

Analysts said the economy may continue to expand at a stable pace in the coming months, although it may slow slightly in the second half.

Given the base effect of 2016, and the possible cooling of the real estate sector as well as changes in the international trade environment, China’s growth in the second half could moderate compared with the first half, Pan Jiancheng, deputy head of the economic monitoring center of the National Bureau of Statistics, was quoted by Securities Times as saying.

“But due to growth continuity, the Chinese economy could maintain a similar growth rate in the third quarter as in the first half, and there is no doubt we will meet our GDP growth target of around 6.5 percent for this year.”

Li Huiyong, chief macroeconomic analyst at Shenwan Hongyuan Securities, said China’s whole-year growth could be 6.8 percent this year, while growth in the fourth quarter could weaken moderately compared with the third quarter.

The IMF predicted last month that China’s growth could reach 6.7 percent this year, compared with 6.6 percent in its April prediction.

According to Caixin’s survey results released on Friday, China’s manufacturing PMI was 51.6 in August, compared with 51.1 in July.

In a separate survey conducted by the National Bureau of Statistics, China’s manufacturing PMI also remained on an upward trend as it stood at 51.7 in August, up from 51.4 in July. But services PMI came in at 53.4 in August, down from 54.5 in July.

The official survey mainly samples large companies, while the Caixin survey mainly covers small and mediumsized enterprises, especially those in eastern coastal regions.

The Caixin Services PMI 52.4

53.4

52.7