China services growth slows in December
By Sean Farrell
Date: Wednesday 06 Jan 2021
(Sharecast News) - China's services sector grew at the slowest pace for three months in December as new orders weakened amid Covid-19 outbreaks at home and abroad.
The Caixin/IHSMarkit purchasing managers' index dropped to 56.3 from a score of 57.8 in November, missing a consensus forecast for activity to be broadly flat.
New business growth was the weakest since September and export sales rose modestly after increasing sharply in November as a resurgence of Covid-19 in overseas markets hit demand. China has also been working to suppress outbreaks of coronavirus in Beijing and other cities.
Workforce numbers rose but only slightly after job creation reached a decade high in November. Business optimism hit a near 10-year high with vaccines showing a way out of the pandemic.
Freya Beamish, chief Asia economist at Pantheon Macroeconomics, said: "The consensus was very optimistic ... The index remains at very strong levels, and a further slowdown seems likely, at least until the vaccine is rolled out."
Despite the dip, growth remained strong and showed China's services continuing to recover from the coronavirus shutdown at the start of 2020.
Higher raw materials and employment costs pushed up prices charged by services businesses at the fastest pace since early 2008. The services result helped nudge the composite PMI down to 55.8 from November's reading of 57.5 - a dip also caused by slowing manufacturing growth.
Wang Zhe, senior economist at Caixin Insight, said: "Looking ahead, we expect the post-epidemic economic recovery to continue for several months, and macroeconomic indicators will be stronger over the next six months due to the low bases in the first half of 2020."
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