China Private Sector Logs Moderate Growth
05 June 2017 - 12:11PM
RTTF2
China's private sector expanded at a moderate pace in May as
services activity growth improved amid a contraction in the
manufacturing sector, survey data from IHS Markit showed
Monday.
The Caixin composite Purchasing Managers' Index rose slightly to
51.5 in May from April's 10-month low of 51.2.
A score above 50 indicates expansion. Nonetheless, the score was
the second-lowest reading seen since September 2016.
The services PMI climbed to 52.8 in May from 51.5 in April. It
marked the first uptick this year and was the highest reading in
four months.
While goods producers reported the slowest increase in output
for 11 months, services activity expanded at a solid pace that was
the quickest since January.
Data showed that the increase in services new orders was the
most marked in the year-to-date. On the other hand, manufacturers
registered the weakest new order growth in the 11-month sequence of
expansion.
In service sector, the rate of job creation eased to the weakest
in the current nine-month sequence of growth. Meanwhile,
manufacturing firms continued to pare back staff numbers, with the
latest reduction the quickest since last September.
As a result, composite employment fell for the second month in a
row in May.
Cost pressures intensified at services companies in May. In
contrast, manufacturing companies recorded the first fall in cost
burdens since June 2016.
Consequently, input prices at the composite level rose at a
moderate pace that was the weakest in 11 months.
Service providers raised their selling prices, while
manufacturers cut their prices. Output charges were broadly
unchanged, which ended a 14-month sequence of inflation.
"The improvement in the services sector bolstered the Chinese
economy in May," Zhengsheng Zhong, director of macroeconomic
analysis at CEBM Group, said.
"However, the rapid deterioration in the manufacturing industry
is worrying. We need to closely monitor whether the diverging
trends in manufacturing and services will widen further,"
Zhengsheng added.
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