China’s Caixin Services Purchasing Managers’ Index fell to a three-month low in May on lack of business optimism amid slowdown in production capacities amid marginal rise in job creation.
China Caixin services PMI fell to 51.2, from 51.8 in April, the second monthly consecutive decline, data released by Caixin showed Friday. However, it remained well above the 50-mark reading, signifying expansion in the world’s second largest economy.
Further, business optimism slid to its lowest level this year, the data statistics body added. However, markets remained muted with the benchmark Shanghai Composite Index down 0.02 percent to 2,924.53 while the yuan remained flat at 6.58.
China’s service sector, believed as the growth engine of the economy, accounts for the bulk of the gross domestic product and is crucial to Beijing's economic transition to consumer-driven growth. It now accommodates real estate and financial services as the major components.
Services companies continued to add to their payroll numbers in May, with the rate of jobs growing only slightly. While some companies hired new staff due to planned company expansions, others mentioned that restructuring plans had acted as a hurdle to staff hiring. Meanwhile, the amount of outstanding work at service providers increased for the second month in a row. However, the pace of backlog accumulation was little-changed from April and marginal, reports showed.
A number of companies foresee that improving client demand and planned company expansions will support higher business activity over the next year, but reports show that an uncertain economic outlook is likely to weigh on the overall level of business confidence.
“The government needs to continue to push forward stabilizing measures to help the economy recover,” said Zhengsheng Zhong, Director, Macroeconomic Analysis, CEBM Group.
The material has been provided by InstaForex Company – www.instaforex.com