China’s services sector stalled to the slowest growth since September 2017, as businesses recorded subdued demand on new orders.
The Caixin/Markit services purchasing managers’ index (PMI) fell 2.3 points from 53.1 points in September to 50.8 points last month, making it the lowest reading in 13 months and a reading that is closer to the 50-mark that separates growth from contraction.
New business orders slacked for the first time in close to 10 years due to subdued demand. Firms which took part in the survey also gave a more pessimistic view on business activity for the next 12 months.
China has been putting a greater emphasis on the services sector, to ease on its traditional dependence on manufacturing and investments.
Last week, Caixin/Markit PMI for manufacturing edged up slightly to 50.1 points for October, from 50.0 points in September, hovering close to the 50-mark line. Official separate PMI numbers released earlier last week showed China’s manufacturing sector growing in the weakest pace in over two years in October, falling below analysts’ expectations.
The slower factory pace has been attributed to the ongoing US-China tariff war, as some US tariffs went into effect in October.
The weaker factory and services PMI readings - with manufacturing hubs stalling and consumers crimping on spending - would mean businesses in China are facing slower growth all round for October, and could equate to a more dismal performance for the last three months of this year.