Chinese Services Sector Growth Picks Up in June
A key measure of the Chinese services sector jumped in June, though growth failed to offset a manufacturing slowdown.
The Caixin/Markit services purchasing managers' index climbed by 1.5 points to 52.7, the highest point since last July. The data followed news on Friday that the corresponding manufacturing PMI had fallen more than expected in June at its fastest pace in four months.
Together the two indices pushed the composite index down to 50.3 from 50.5, signalling the slowest growth rate for four months and the third monthly decline in a row. Readings above 50 signal economic expansion.
The services sector growth, which was reinforced by official data focused on large enterprises, reflects some success in the Chinese government's efforts to rebalance the economy away from industrial output. It follows positive commentary about the Chinese businesses of consumer sector companies including Nike (NKE) - Get Report and Carnival Cruise (CCL) - Get Report . However, the growth is unlikely to be enough to prevent growth slowing in the second quarter. Second-quarter GDP figures for China are out on July 15.
Nomura is expecting second-quarter GDP growth of 6.3%, after 6.7% first-quarter expansion, falling to 5.7% and 5.5% in the subsequent two quarters.
Caixin said on Tuesday new business increased for services companies, with survey participants commenting that new projects and firmer client demand had boosted sales.
"Service sector growth is now supporting the overall economy, and the expansion for services is coming at a time when the manufacturing index is contracting, suggesting the nation's economic structure is becoming more balanced. The government must continue to relax service sector controls to encourage its development and push forward the nation's economic transformation," said CEBM Group economist Zhengsheng Zhong in the PMI report.
Chinese stock benchmarks were largely higher following the data, with the CSI 300 composite index up 0.11% at 3,208.29. In Hong Kong the Hang Seng was down 0.75% at 20,901.81. Hang Seng was recently down 0.75% at 20,901.82.