Chinese service sector growth accelerates in October

Wpid Money Growth

China’s service sector logged a strong momentum in October underpinned by business activity and new work, data published by IHS Markit showed on Wednesday.

The Caixin services purchasing managers’ index rose to 53.8 in October, from 53.4 in September. The rate of growth was the quickest seen since July. A reading above 50.0 indicates expansion in the sector.

Driven by improved market conditions and increased customer demand, new orders posted the steepest growth in three months. Export orders also returned to growth in October. Employment at services companies rose for the second month in a row, though the rate of job creation remained mild overall.

Backlogs of work across China’s service sector were unchanged in October, following a three-month sequence of accumulation.

On the price front, the survey revealed that average input price inflation increased a three-month high. Panel members attributed the latest rise in expenses to greater staff and raw materials costs.

Subsequently, output price inflation accelerated at the fastest pace since July. Service providers expect a further recovery from the pandemic and subsequent increases in client demand to support growth of business activity in the coming 12 months.

The composite output index, which combines the performance of manufacturing and services activity, gained marginally to 51.5 in October, from 51.4 in September.

The upturn was driven by a further expansion in services activity, as manufacturing production declined for the third month in a row. A new wave of Covid-19 outbreaks has reappeared in some central and western regions since late October, which means fresh economic disruptions,

Wang Zhe, a senior economist at Caixin Insight Group said. It is critical to balance the goals of controlling the outbreaks and maintaining normal economic activity.

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