China’s services sector growth hits 3-month high

6 September, 2019 12:00 AM printer

Beijing: Activity in China's services sector expanded at the fastest pace in three months in August as new orders rose, prompting the biggest increase in hiring in over a year, a private survey showed on Wednesday.

Stronger job creation by services firms will be welcome news for Beijing, which is struggling to reverse a prolonged slump in the manufacturing sector which has dragged economic growth to near 30-year lows, report agencies.

The Caixin/Markit services purchasing managers' index (PMI) picked up to 52.1 last month, the highest since May, compared with July's 51.6. The index has stayed above the 50-point level that separates growth from contraction on a monthly basis since late 2005. New business accelerated slightly to a four-month high, with companies citing improving underlying demand and a boost from new projects.

But a sub-index for export orders pulled back from July's three-month high, possibly due to heightened US-China trade tensions.

The services sector accounts for over half of China's economy, providing an important buffer to mounting export pressures. But growth has been generally cooling over the past year as businesses and consumers grow more cautious on spending.

Washington began slapping 15 per cent tariffs on a wide range of Chinese goods on Sunday - including footwear, smart watches and flat-panel televisions. Tariffs of 15 per cent on cellphones, laptop computers, toys and clothing are to take effect on Dec 15.

The private survey's findings largely dovetailed with an official gauge last week, which also showed improving service sector conditions. "China's economy showed clear signs of a recovery in August, especially in the employment sector," said Zhong Zhengsheng, director of Macroeconomic Analysis at CEBM Group, in a statement alongside the data.

There were signs that government growth boosting measures were gradually kicking in, Mr Zhong said. "However, the US-China trade conflict remained a drag, and business confidence remained depressed," he added.