Services Activity Expansion Remains Weak, Caixin Survey Shows

- Nov 30, 2017-

Expansion in China’s services activity picked up in October but was among the weakest rates in nearly two years, another sign of the cooling of the world’s second-largest economy, a Caixin survey showed Friday.

The Caixin China General Services Business Activity Index rose to 51.2 last month from 50.6 in September, which was the worst reading since 50.2 in December 2015.

While it still sat above the “50” mark that divides expansion from contraction, October’s reading marked the second-slowest rate since the end of 2015.Despite the uptick in the services sector, the Caixin China Composite Output Index, which covers manufacturing and services companies, fell to 51.0 — the weakest expansion in 16 months — from 51.4 in September, hit mainly by a slowdown in production by manufacturers, the survey showed.October’s Caixin China General Manufacturing Purchasing Managers’ Index, published on Wednesday, came in at 51.0, unchanged from September, with strict government environmental policies fueling inflation and contributing to delays in the delivery of supplies. The subindex of output weakened to a four-month low.The Caixin PMIs for October showed that the economy had a relatively weak start to the fourth quarter,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group.However, monetary policy is unlikely to be loosened unless major downside risks emerge.”Chinese officials have signaled a shift in priorities regarding economic growth, with more emphasis placed on quality than speed. The change could see the government become more tolerant of slower expansion and less likely to resort to stimuli.

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