China’s services sector sees slowdown in growth

China’s services sector has seen growth slow in January although total output expanded for the sixth successive month according to figures from the HSBC China Services PMI (purchasing managers’ index) data.

The rate of growth fell from 50.9 in December to 50.7 in January, keeping it only just above the rate of 50 that marks expansion, as Chinese manufacturers recorded the weakest expansion figure for four months.

Chinese service providers reported a further growth of new order books over the month, according to the PMI data, although it was the weakest rise in new business since June 2013.

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In spite of these conditions, however, the report stated Chinese service providers were optimistic in January, generally expecting activity levels to be higher over the next year driven by forecasts of improving economic conditions and new product launches.

Hongbin Qu, chief economist, China and co-head of Asian economic research at HSBC, said: “The slower expansion of services activities in January reflected soft manufacturing growth and the impact of Beijing’s latest measures to curb official extravagance. As business sentiment remains stable, we expect services growth to bounce back a little in the coming months. Yet a meaningful improvement relies on stronger growth of manufacturing sectors and the implementation of reforms to boost service sectors.”