China’s services sector picks up momentum in September

Helped by higher new business orders, China’s services sector for September expanded to 53.1 points, from 51.5 points in August.

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China’s services sector for September expanded to 53.1 points, higher than the 51.5 points in August and staying above the 50 level that separates growth from contraction, the Caixin/Markit services purchasing managers’ index (PMI) showed on Monday.

The pick up from last month came mostly from higher new business orders, with the sub-index at 52.4 points, edging up from 51.7 points in August.

The respite from the services sector supports the China economy from its stalled factory activity affected by the impact from US tariffs. China’s recent manufacturing activity data for September showed its Caixin/Markit manufacturing PMI falling more-than-expected to 50 points from 50.6 points in August, far below economist’s forecasts and hovering close to a contraction.

China’s services sector makes up more than half of the country’s gross domestic product. For January to June of this year, the services sector expanded 7.6 percent year-on-year. The sector includes services such as finance, real estate services, and retailing.

In spite of the better numbers, the Caixin/Markit services PMI employment sub-index contracted to 49 points for the first time since July 2016. Analysts suggest that companies are shedding more workers than hiring them in that sector, and this contraction indicates dampened business expectations for the services sector in the near term.

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