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Updated February 5th, 2024 at 07:22 IST

China's service sector growth slows in January

In January, the pace of new orders moderated, with the index dropping to 51.5 from December's 53.7.

Business Desk
China service sector growth
China service sector growth | Image:Pexels
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Chinese economy: China's service sector witnessed a modest deceleration in expansion during January, as indicated by the latest Caixin PMI report released on Monday. 

The index, reflecting purchasing managers' sentiments, edged slightly lower to 52.7 from December's 52.9. Despite this, the sector maintained its growth streak for the 13th consecutive month, staying above the critical 50-point threshold that separates expansion from contraction.

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This report follows recent official data highlighting a contraction in factory activity, offering insights into the early dynamics of the world's second-largest economy for the year. 

China continues to grapple with various challenges, including subdued demand, a prolonged slump in the property market, and mounting local government debt, all of which are impeding efforts to regain economic momentum.

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In January, the pace of new orders moderated, with the index dropping to 51.5 from December's 53.7. 

However, companies managed to marginally increase their workforce for the second consecutive month. 

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Notably, the prices charged by service providers declined for the first time since April 2022, attributed to firms reducing fees to attract customers and drive sales.

Senior Economist Wang Zhe from the Caixin Insight Group said the prevailing uncertainties and adverse factors influencing the economy, indicate a lack of fundamental reversal in the current economic landscape. 

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Business confidence for the year ahead in the service sector dipped to its lowest level in three months.

The composite PMI, which combines both manufacturing and services data, saw a marginal decrease to 52.5 in January from December's 52.6. 

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Analysts stress upon the need for further fiscal and monetary policy adjustments to bolster economic recovery. 

Vice Finance Minister Wang Dongwei reaffirmed the government's commitment to fiscal expansion this year as a means to stimulate growth, signaling that public spending will remain a primary instrument for economic upliftment.

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(With Reuters Inputs)

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Published February 5th, 2024 at 07:22 IST

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