Services more resilient as activity picks up
Print Edition
China’s service activity in private firms improved in December as the sector proved more resilient than manufacturing which continued to worsen, a survey showed yesterday.
The HSBC China Services Business Activity Index, a gauge of operating conditions in private service companies, strengthened to 53.4 last month, up from 53 in November, according to HSBC Holdings Plc and research firm Markit.
A reading above 50 means expansion.
Meanwhile, the official non-manufacturing Purchasing Managers’ Index, a similar gauge compiled by the National Bureau of Statistics that weighs toward state-owned service firms, also rose to 54.1 in December from 53.9 a month earlier.
Qu Hongbin, chief economist for China at HSBC, said the solid performance of services was supported by the strong expansion in new business.
“The service sector continued to hold up well amidst the manufacturing downturn, providing some counterweight to the downward pressure on the economy,” Qu said.
But Qu said the overall economy still had insufficient demand and more easing steps are needed in the coming months.
Earlier data showed that manufacturing activity in China’s state-owned enterprises grew at the slowest in 18 months in December, while activity in private and export-oriented companies shrank for the first time in seven months.
Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd, said the service sector grew rapidly in the past few years, compared with the industrial sector.
“From this perspective, we need to look at more indicators regarding the service industry to gauge the performance of China’s economy,” Zhou said.
China’s gross domestic product grew 7.3 percent from a year earlier in the third quarter of last year, the slowest pace in over five years, led by corrections in the property sector.
This led to the People’s Bank of China cutting the key interest rates in November for the first time in more than two years as well as unveiling easier policies that lifted some curbs on housing transactions.
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