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March 6, 2018

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Caixin service PMI eases but still ends up positive

CHINA’S services activity eased in February amid cooling demand but an index measuring the activity level still ended in positive territory, according to a private report yesterday.

The Caixin China General Service Purchasing Managers’ Index inched down to 54.2 last month from 54.7 in January, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media.

A reading above 50 signals growth while one below 50 means contraction.

The report said that despite slowing expansion since January, the growth in services activity held close to January’s 68-month record and remained solid generally. The overall Chinese business activity still remained in positive territory in February.

The growth in new orders fell slightly across the service sector in February from a month earlier.

Employment continued to rise for the 18th consecutive month to meet business requirements but the pace was slower than in January.

“The input prices index declined from the previous month’s high, but the index for prices charged unexpectedly moved up, indicating the profitability of services business was moving in a positive direction,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group.

The future output expectations index, which reflects services’ outlook for the next 12 months, increased, according to the report.

Released last week, the Caixin manufacturing PMI inched up to a nine-month high at 51.6 in February from 51.5 in January.

The Caixin Composite PMI, which covers both manufacturing and services, came in at 53.3 for February, down from January’s high of 53.7, as manufacturing output and services business activity indices fell from the previous month.

Meanwhile, the official non-manufacturing PMI released last week also dipped 0.9 from January to 54.4 in February but was 0.2 higher than the same month last year.

The official non-manufacturing PMI survey covers 4,000 large and small companies, while the Caixin service PMI measures over 400.

The services sector contributed to over half of China’s economy in recent years as it is transforming its investment-driven economy to a consumption-powered model.


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