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Updated January 4th, 2024 at 14:20 IST

China's December services sector shows fastest growth in five months

The improved sentiment in the service sector is attributed to a notable rise in new business, with firms citing increased customer numbers and spending.

Business Desk
China
China | Image:Pexels
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Chinese economy: China's service sector experienced a robust expansion in December, marking the quickest pace in five months, according to a private-sector survey released on Thursday. 

The Caixin/S&P Global services purchasing managers' index (PMI) rose to 52.9, up from November's 51.5, reflecting a solid increase in new business. This upbeat data contrasts with an official survey from Sunday, which indicated a contraction in services activity at the end of 2023, prompting calls for additional stimulus measures in the new year.

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The improved sentiment in the service sector is attributed to a notable rise in new business, with firms citing increased customer numbers and spending. 

Foreign demand for Chinese services also saw growth, with a major influx of travellers from France, Germany, Italy, the Netherlands, Spain, and Malaysia entering China in December.

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The positive conditions led to an expansion in staffing levels, as businesses sought to meet rising demands. 

While the services firms expressed optimism about their business activity in 2024, it was noted that overall business conditions in 2023 were challenging due to macroeconomic trends.

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The Caixin/S&P's composite PMI, which combines manufacturing and services data, rose to 52.6 in December, the highest reading since May. 

Despite the positive outlook in the services sector, the National Bureau of Statistics (NBS) reported a downbeat PMI, suggesting ongoing economic pressure in China. 

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Analysts attribute the divergence between the Caixin PMI and the official PMI to differences in geographic and sector coverage.

Looking ahead, China's central bank injected 350 billion yuan ($49.01 billion) in loans to policy banks in December, fueling expectations of further interest rate cuts to stimulate growth. 

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Economic indicators, including industrial output and retail sales, will be released by the NBS in the coming weeks, providing a comprehensive overview of China's economic performance.

(With Reuters Inputs)

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Published January 4th, 2024 at 07:23 IST

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