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Drop in China's Services Sector Growth For September: Caixin Data


October, 09 2017
watermark Economic news

China’s services expanded at the slowest rate in the since January 2016 as the market cools down reflected in the private survey. There has been a big drop to the official indicator of the non-manufacturing sector in the services sector which grew at the quickest pace since September 2014. This has obscured the notion on the status of the economy.


The Caixin/Markit services purchasing manager’s index (PMI) dropped to 50.6 September which was the lowest reading since December 2015 and considered and one of the record low figures since the survey in 2005. A reading higher than 50 implies growth while lower than it would mean a contraction. The index reached a three month high of 52.7 in August.


In September, the business has been at a slower progress compared to the previous month but is still proportionately strong with a reading of 52.0 despite the pile-up of work for the first time in five months and the job opportunities have narrowed down.


The survey shows a lesser inflation from the manufacturing industry with the price pressures in China which mainly concerns upstream industries on raw materials and considered on the consumer level.


Input price inflation has been augmented a bit for the month of August but not entirely to the expansion of the area, although the prices rose for a bit following a drop in two months ago. China relies on growth in services particularly highly-value added services in the finance the technology to lessen the traditional dependence on heavy industries and investments.


On another report of Caixin/Markit survey, it showed increased in the manufacturing sector for September in a slow manner but factory sector improved faster than the services. The Caixin’s composite manufacturing and services PMI declined to 51.4 in September from 52.4 in August which has been the lowest level since June.


Overall, the Chinese economy performed well in the third quarter according to a macroeconomic analyst from CEBM group following the release. Both the manufacturing and services declined in September implying a downtrend pressure on economic growth which would happen again in the fourth quarter. The predicted growth is much stronger than the forecast of 6.9 percent for the first half of the year which is anticipated to exceed the whole year-target of 6.5 percent even if the growth slackens in the few months.


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