Financial News: China Service Sector Growth Accelerates On New Business

China Service Sector Growth Accelerates On New Business

08/05/2024 - 01:16:00 (RTTNews)

(RTTNews) - China's service sector growth accelerated in July on faster growth in new business inflows, data published by S&P Global showed on Monday.

The Caixin services Purchasing Managers' Index rose to 52.1 in July from 51.2 in June. The score was expected to rise to 51.4.

The score has remained above the neutral 50.0 mark since July 2023 but the pace of growth remained below the year-to-date average.

The faster new business growth was supported by sustained improvement in underlying demand conditions and an expansion of services offerings, the survey showed.

Driven by rising interest from overseas clients and growth of tourism, export business expanded again in July. Nonetheless, the pace of growth was the weakest in the current 11-month sequence.

In order to meet rising workloads, service providers hired additional employees. Employment grew the most in nearly a year. As a result, outstanding business in July decreased from the previous month.

On the price front, the survey showed that average input prices continued to increase on higher input material, wage and transport costs.

That said, average selling prices were unchanged in July. Instances of services providers raising selling prices to reflect higher cost burdens were offset by others lowering selling prices to support sales.

Finally, the level of business confidence was the second-lowest since March 2020 and ranked just above June's low.

The composite output index that combines performances of manufacturing and services showed a slowdown in the private sector growth, the survey revealed. The composite output index posted 51.2 in July, down from 52.8 in June.

Business activity expanded for a ninth straight session but at the least pronounced pace in the current sequence.

Caixin Insight Group Senior Economist Wang Zhe said it will be challenging to meet the annual economic growth target of around 5 percent this year. The most prominent issues are still insufficient effective domestic demand and weak market optimism.

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