Caixin PMI for services misses expectation despite rising new orders

Source:Global Times Published: 2019/10/8 20:54:29

File photo: IC

The Caixin purchasing managers' index (PMI) for the services sector in September indicates that China's services growth dropped to its lowest point in September despite a rise in new orders, while the composite PMI - which monitors activity in both services and manufacturing sectors - showed slight improvement, according to experts. 

The Caixin services PMI fell to 51.3 in September, dropping to its lowest point in seven months and missing the market expectation of 52.1. The composite PMI, which was 51.9, stood 0.3 points higher than in August, reaching its highest level since May. 

Readings above 50 imply expansion, while readings below that level fall into contraction territory. 

New orders for the services sector in September rose at the fastest pace since January last year, but activity in the sector was restrained by rising costs and concern over fluctuations in exchange rates, Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, said in the Caixin report.

However, the increase in the composite PMI signals that rising business activity in the manufacturing sector is offsetting some of the drag from the services sector, showing an overall rising economic performance, according to Caixin.

The services sector accounted for about 55 percent of China's GDP in the first six months of 2019, according to the National Bureau of Statistics. The sector is also the biggest contributor of jobs in the country, providing 359 million jobs in 2018 and accounting for 46.3 percent of total employment. 

Tian Yun, a vice director of the Beijing Economic Operation Association, told the Global Times that the rise in new orders in September - despite a drop in export growth - can be partly attributed to seasonal domestic growth during the Mid-Autumn and National Day holidays, but fiscal and monetary policies also pushed up demand in the sector. 

"The mild growth in the services sector in China runs against the general downward trend globally," Tian said. "It is largely due to robust domestic demand in the market, especially buoyed by the holidays in September."

According to Tian, monetary and fiscal policies, including adjustments in interest rates, are helping businesses sustain a high level of demand. 

Posted in: ECONOMY

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