A worker wearing a face mask works on a production line to make a steel rim for bicycles at a factory, as the country suffers from an outbreak of the new coronavirus, in Hangzhou, Zhejiang Province, China on March 2, 2020. China Daily via Reuters/File Photo Obtaining licensing rights
BEIJING, Sept 5 (Reuters) – China’s services activity grew at the slowest pace in eight months in August, a private sector survey showed on Tuesday, as weak demand continued to weigh on the world’s second-largest economy and stimulus failed to significantly revive consumption. .
The Caixin/S&P global services PMI fell to 51.8 in August from 54.1 in July, the lowest reading since December when the coronavirus confined many consumers to their homes. The 50-point mark separates expansion from contraction in activity.
The data is broadly in line with the official services PMI released last week, which showed the sector continuing its downward trend. Even the record number of passenger rail trips and excellent box office profits over the summer failed to lift the reading.
Although both the official and Caixin manufacturing PMIs beat market expectations and showed an increase from July to August, a decline in services activity continues to weigh on the economy amid slowing demand and a decline in real estate.
The Caixin/S&P composite PMI, which includes manufacturing and services activity, fell to 51.7 from 51.9 in July, marking the eighth straight month of expansion, albeit the weakest since January.
“The marginal slowdown in the expansion of supply and demand in the service sector offsets the improvement in manufacturing production and demand,” said Wang Qi, an economist at Caixin Insight Group, adding that “there is still significant downward pressure on the economy.”
Beijing has issued a series of measures in recent months to revive slowing growth, with the central bank and top financial regulator last week easing some borrowing rules to help homebuyers. But analysts warn that these measures may find it difficult to move the needle amid a slow labor market recovery and an uncertain household income outlook.
The increase in new orders in the services sector was below the average for 2023 so far, partly due to weak foreign demand, according to the Caixin Services PMI.
New export business fell for the first time since December amid slowing external conditions.
Business confidence for the 12-month outlook reached its lowest level in nine months.
Although growth momentum slowed, companies continued to add employees last month due to rising business demands and capacity expansion plans.
Meanwhile, premium business piled up further, with the rate rising to the highest level since January.
On the price front, input cost inflation fell to its lowest levels in six months, while selling prices rose at the slowest rate since April.
Reporting by Ellen Zhang and Ryan Wu, Editing by Sam Holmes
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