Firm do­mes­tic de­mand boosts ser­vices sec­tor

Shanghai Daily - - BUSINESS - MACRO-ECON­OMY (Reuters)

CHINA’S ser­vices sec­tor grew at its quick­est pace in five months in Novem­ber thanks to an uptick in new or­ders, a pri­vate sur­vey re­leased yes­ter­day showed.

The Caixin/Markit ser­vices pur­chas­ing man­agers’ in­dex rose to 53.8 in Novem­ber from 50.8 in Oc­to­ber, well above the 50.0 mark sep­a­rat­ing growth from con­trac­tion.

The bounce off the 13-month low in Oc­to­ber sug­gests pock­ets of strength in do­mes­tic de­mand in a sec­tor that ac­counts for more than half of China’s gross do­mes­tic prod­uct and ur­ban jobs.

A sus­tained im­prove­ment in the vast ser­vices in­dus­try would help steady an econ­omy that has wob­bled amid trade fric­tions with the United States, a man­u­fac­tur­ing slow­down at home and a cooler real es­tate mar­ket. The subindex for new busi­ness in China’s ser­vices sec­tor rose to 52.5 in Novem­ber, also a five-month high, from 50.1 in Oc­to­ber, although the rate of growth was mod­est and within re­cent ranges.

Firms also in­creased their staffing in Novem­ber, but at a more grad­ual pace than a month ear­lier. The subindex for em­ploy­ment was at 50.7 ver­sus 51.1 in Oc­to­ber.

While em­ploy­ment in the sec­tor has ex­panded for 27 months, with the ex­cep­tion of a slight dip in Septem­ber this year, the growth has been shal­lower than the his­tor­i­cal av­er­age.

Op­er­at­ing ex­penses con­tin­ued to rise in Novem­ber, with a num­ber of firms cit­ing higher raw ma­te­rial prices and fuel costs, ac­cord­ing to the Caixin sur­vey. The subindex for in­put prices stood at 53.3, un­changed from Oc­to­ber.

De­spite the up­ward pres­sure on in­put costs, com­pa­nies raised their prices only marginally, with some firms say­ing they had to stay com­pet­i­tive.

The in­tense com­pe­ti­tion and un­cer­tain out­look on client de­mand hit busi­ness sen­ti­ment, with the con­fi­dence gauge to­ward the next 12 months slip­ping to a four­month low of 56.1.

Caixin’s com­pos­ite man­u­fac­tur­ing and ser­vices PMI, rose to 51.9 in Novem­ber from 50.5 in Oc­to­ber, although the growth rate was rel­a­tively mar­ginal com­pared with pre­vi­ous months.

China’s fac­tory ac­tiv­ity grew slightly in Novem­ber, mainly propped up by man­u­fac­tur­ers cut­ting prices.

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