China’s services sector grows thanks to new overseas orders

Business activity in China continued to expand in February, according to survey data yesterday, led by the country’s services sector, Alliance News reported.

The Caixin services purchasing managers’ index edged down to 52.5 points in February from 52.7 in January. Remaining above the neutral 50-point mark, the figure shows the sector continued to grow.

However, it marked the slowest pace of expansion since November last year and came in slightly lower than FXStreet-cited market consensus of 52.9 points.

“The slower rise in business activity coincided with a further mild upturn in overall new work placed with Chinese service providers during February. New order growth was little-changed from January and remained slower than the average seen over 2023 as a whole. In contrast, services companies registered a solid and accelerated increase in new work from overseas,” S&P Global noted.

Having risen in January, payroll numbers fell across the service sector in February at the fastest pace seen in over a year. Meanwhile, input price inflation picked up slightly, amid higher raw material and fuel costs. After selling prices eased in January, firms raised their prices in February to pass on the higher costs to customers.

“Market optimism was steady. Looking ahead, some surveyed companies indicated expansion plans, which showed they were confident there will be a further improvement in demand. However, the corresponding measure for expectations about future activity remained below its historical average,” said Caixin senior economist Wang Zhe.

The composite PMI, which weighs services and manufacturing, was unchanged at 52.5 points. Released on Friday last week, the manufacturing PMI pointed to a slight expansion at 50.9 points in February, edging up from 50.8 the month before.

The services PMI is compiled by S&P Global from questionnaires sent to 650 services companies in mainland China, excluding Hong Kong and Macau. Responses are collected in the second half of each month.
Alliance News