BEIJING (Reuters) – China’s services activity grew at its slowest pace in eight months in August, a private sector survey found Tuesday, as weak demand continued to haunt the world’s second-largest economy and stimulus measures failed to materialize. managed to revive consumption in a meaningful way.
The Caixin/S&P Global Services Purchase Managers’ Index (PMI) fell from 54.1 in July to 51.8 in August, the lowest since December when COVID-19 kept many consumers at home. The 50-point figure separates expansion from contraction in activity.
The data was broadly in line with the official services sector PMI released last week, which showed that the sector continued to trend downwards. Not even the record number of passenger train trips and tremendous box office revenue during the summer could drive the numbers up.
While both official PMIs and Caixin manufacturing PMIs beat market expectations and rose from July to August, declining services activity is still weighing on the economy amid weak demand and a downturn in the real estate sector.
The Caixin/S&P composite PMI, which includes both manufacturing and services, fell to 51.7 from 51.9 in July, marking the eighth consecutive month of growth, albeit the weakest since January.
“The marginal slowdown in supply and demand growth in the services sector offset the improvement in output and demand in the industrial sector,” said Wang Zhe, economist at Caixin Insight Group, adding: “There was still a significant downward pressure on the economy.”
Beijing has taken a series of measures in recent months to revive slowing growth, with the central bank and major financial regulator relaxing some lending rules last week to help homebuyers. But analysts warn that these measures will struggle to make headway in the face of a slowing labor market recovery and uncertain household income expectations.
New order growth in the services sector has been below the average for 2023 so far, due in part to weaker foreign demand, according to the Caixin services PMI.
New export business fell for the first time since December due to sluggish conditions abroad.
Business confidence for the 12-month outlook reached a nine-month low.
While growth momentum has slowed, companies continued to add staff over the past month due to higher business requirements and plans to expand capacity.
Outstanding sales, meanwhile, continued to pile up, with interest rates rising to their highest level since January.
On the price front, input cost inflation cooled to its lowest level in six months, while selling prices rose at their slowest pace since April.
(Reporting by Ellen Zhang and Ryan Woo; editing by Sam Holmes)