A fall in manufacturing output and a “moderation” in the rate of service sector activity growth has slowed the expansion rate of Chinese business activity.
The latest data from the HSBC China Composite Purchasing Managers’ Index (PMI), which covers both manufacturing and services, shows that while business activity did rise in June, it was the slowest rate of expansion since May 2014.
Anything above a PMI of 50 signifies growth but in June the composite PMI recorded a level of 50.6 compared with 51.2 in May. Meanwhile the services sector recorded its slowest expansion since January this year, with the HSBC China Services Business Activity Index posting a figure of 51.8 a fall from May’s eight month high of 53.5.
The report attributed the slowdown in services activity growth as reflecting “softer new business gains in June” with service providers signalling the slowest increase in new orders in 11 months. It added respondents had suggested the relatively subdued market conditions had dampened overall client demand.
Annabel Fiddes, economist at Markit, which compiles the data, said: “Latest PMI data signalled a further loss of growth momentum in China’s economy at the end of the second quarter. In the service sector, business activity, new orders and employment all expanded at slower rates, while optimism towards the business outlook also moderated. Meanwhile, manufacturers cut their staff numbers at the quickest rate in over six years and output fell slightly for the second month in a row.
“The persistent underperformance of manufacturers combined with a slowdown in the service sector could prompt the authorities to introduce further stimulus measures to ensure growth momentum improves in the second half of the year - and reach the GDP growth target of around 7 per cent.”
