China March services activity slows down

BEIJING: Activity in China’s service sector expanded at its weakest pace in six months in March, hurt by slower growth in new orders and intensifying cost pressures, a private survey showed, painting a less rosy picture of a sector that Beijing is counting on to maintain economic momentum.

The Caixin/Markit services purchasing managers’ index (PMI) for March fell to 52.2 from February’s 52.6, but remained above the 50-level that separates expansion from contraction. The survey of largely medium- and small-sized firms showed activity at its lowest since September 2016.

The result contrasted with official surveys showing services PMI growth for March accelerating at the fastest pace in almost three years, and manufacturing activity unexpectedly expanding at the quickest rate in nearly 5 years last month.

In Thursday’s private services survey subdued business demand pulled down the headline PMI index. There are concerns China’s real estate sector - a big growthdriver for sectors from construction to banking - could become a drag on the broader economy as they were hit with fresh waves of housing policy curbs in mid-March.

The new business sub-component slipped 1.1 percentage points to 52.2 in March, the weakest demand for China’s service providers since September 2016. “Weaker increases in new business have clouded the economic outlook, and investors should watch closely for signs of a turning point in the second quarter,” Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said in a note. — Reuters