The services sector in China expanded at an accelerated pace in April, the latest survey from HSBC showed on Wednesday, with a PMI score of 52.9.
That’s up from 52.3 in March, and it moves further above the boom-or-bust score of 50 that separates expansion from contraction.
Among the individual components, Chinese service sector activity growth quickened to a solid pace, while output stagnated at manufacturers.
New business increased at a faster pace at service providers, but declined again at goods producers.
The composite PMI slid to 51.3 from 51.8 in March.
“The latest set of PMI data indicated that Chinese service sector companies had a strong start to Q2, with activity and new orders both rising solidly in April. However, a downturn in manufacturing operating conditions led to a weaker expansion of overall business activity in April, with composite output rising at the slowest rate in three months,” said Markit economist Annabel Fiddes.
The slower expansion of total business activity was largely driven by a stagnation of manufacturing output in April, following three months of growth. Meanwhile, service sector activity ncreased solidly over the month. It was the strongest expansion of business activity at service providers in four months.
Latest survey data signalled that new order trends continued to differ between manufacturers and service providers, with new business falling at manufacturers for the second month in a row but rising again at services companies.
While manufacturing companies reported further job shedding in April, service sector firms raised their staff numbers for the twentieth successive month.
At the composite level, employment fell slightly for the second consecutive month, backlogs of work declined across both the manufacturing and service sectors in April. It was the first time that outstanding business had fallen at manufacturers since May 2014.
Consequently, outstanding work fell modestly at the composite level. Average input costs fell sharply at manufacturing companies during April, but continued to increase at service providers.
Service providers felt optimistic towards the 12-month business outlook in April. However, the overall degree of confidence weakened to the lowest since last July.
“Sustained job shedding at manufacturing firms offset a modest rise in service sector staff numbers, leading total employment to fall for the second month in a row. This suggests that, despite recent stimulus measures, such as cuts to banks’ reserve ratios and lending/deposit rates, more measures may be required to ensure the economy does not slow further from the 7 percent annual pace of growth registered in Q1,” Fiddes said.
The material has been provided by InstaForex Company – www.instaforex.com