China's services sector growing more slowly, new private survey shows

A file picture dated Jun 1, 2015, shows workers making clothes at a factory in Huaibei, China, to be exported.
A file picture dated Jun 1, 2015, shows workers making clothes at a factory in Huaibei, China, to be exported.PHOTO: EPA

BEIJING (REUTERS) - Activity in China's services sector expanded at a slower pace in November, a private survey showed on Thursday, as new orders weakened.

The Caixin/Markit Purchasing Managers' Index dropped to 51.2 in November from a three-month high in October of 52.0.

A reading above 50 points signifies growth on a monthly basis, while one below that points to a contraction.

New business rose at a slower pace of 51.1, down from 52.9 in October, showing weaker domestic and external demand while employment in services rose only marginally, with the smallest increase in three months.

Business confidence crept up slightly from October's record low but remained historically weak.

There was a third consecutive contraction in prices charged, even though input prices increasing, with the survey noting reports of greater competition for new business.

With services now contributing more to the economy than old drivers such as manufacturing, Chinese authorities have hoped the sector will more than offset persistent contraction in factory activity.

Indeed, a composite Caixin PMI reading combining manufacturing and services turned positive for the first time in four months in November. "This shows that the macro economy has moved further toward stable growth and the economic structure is improving," He Fan, chief economist at Caixin Insight Group, said. "Future fiscal and monetary policies must be coordinated and large-scale stimulus should be avoided as much as possible." On Tuesday, China's official services survey showed on growth in the sector improved with the non-manufacturing PMI up half an index point to 53.6.

China's official PMI for manufacturing, also released on Tuesday, showed factory activity hitting a three-year low in November, fuelling concerns about the country's weak economic expansion.