PMI points to mod­est eco­nomic ex­pan­sion

The Myanmar Times - Weekend - - International Business -

GROWTH in the ser­vices sec­tor in Novem­ber notched up its fastest pace in the past five months, un­der­pin­ning a mod­est ex­pan­sion of the world’s sec­ond-largest economy, ac­cord­ing to a pri­vate sur­vey re­leased on Wed­nes­day.

The Caixin/markit ser­vices pur­chas­ing man­agers’ in­dex, re­flect­ing ex­pan­sion in the busi­ness ac­tiv­i­ties of the ser­vices sec­tor, re­bounded by 3 per­cent­age points to 53.8 in Novem­ber.

With the steep­est growth of the ser­vices sec­tor since July and a sta­ble man­u­fac­tur­ing pro­duc­tion for the sec­ond month in a row, the Caixin/ Markit Com­pos­ite PMI picked up to 51.9 in Novem­ber from Oc­to­ber’s 28-month low of 50.5. The 50-mark sep­a­rates growth from con­trac­tion. Both in­dexes were re­leased by Caixin Me­dia on Wed­nes­day.

“The re­bound in the com­pos­ite in­dex showed that eco­nomic down­turn pres­sures no­tably eased in Novem­ber,” said Zhong Zheng­sheng, di­rec­tor of macroe­co­nomic anal­y­sis at CEBM Group.

Re­cov­ery in eco­nomic ac­tiv­i­ties was mainly driven by im­proved do­mes­tic de­mand, Zhong added, cit­ing that the strong rally in the sub-in­dex of new or­ders and the fall in that of ex­port or­ders.

In­creased de­mand in the ser­vice sec­tor shored up to­tal de­mand, as ser­vices com­pa­nies reg­is­tered the steep­est rise in to­tal new or­ders since June in Novem­ber, while new busi­ness across the man­u­fac­tur­ing sec­tor only picked up at a mar­ginal pace.

De­spite the pickup in de­mand, the growth pace in prices charged by ser­vices providers fell in Novem­ber, while that for in­put costs re­mained solid and un­changed from Oc­to­ber, which was not good for com­pa­nies’ prof­its, Zhong said.

“Ris­ing la­bor costs, house rents and meat prices this year have weighed on many cater­ing busi­nesses,” said Ha Nan, founder and CEO of Bei­jing Liushan­men Tech­nol­ogy, which was set up in 2015 and fo­cuses on pro­vid­ing an in­no­va­tive type of cater­ing sup­ply chain ser­vice.

But Ha said the trend of ris­ing la­bor costs has prompted mid and small-sized chain restau­rants to con­tain costs by co­op­er­at­ing with his com­pany, which cen­tral­izes and in­dus­tri­al­izes the pro­duc­tion of semifin­ished dishes for the restau­rants.

Dong Dengxin, an eco­nom­ics pro­fes­sor at Wuhan Univer­sity of Science and Tech­nol­ogy, said the ser­vices sec­tor is where new busi­ness mod­els con­cen­trate, un­der­pin­ning the economy’s tran­si­tion to in­no­va­tion-based growth.

Of­fi­cial data showed the ser­vices sec­tor ac­counted for 58.8 per­cent of China’s GDP growth in 2017. Tang Yao, an as­so­ciate pro­fes­sor at Guanghua School of Man­age­ment at Pek­ing Univer­sity, ex­pected the num­ber to fur­ther in­crease. “With this in­crease, the economy’s re­liance on external de­mand will con­tinue to drop,” Tang said.

The of­fi­cial PMI of the ser­vices sec­tor also recorded solid ex­pan­sion at 52.4 in Novem­ber, 0.3 per­cent­age point higher than the pre­vi­ous month. – China Daily

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