The July Chinese services PMI is out and continued its recent insipid performance:
Latest data signalled a further increase in business activity in China’s service sector. That said, the rate of expansion was only modest and unchanged from the previous month. Furthermore, growth remains substantially weaker than the historical average. In contrast, growth in new orders accelerated over the month and, though modest, was the quickest since March.
Employment in the sector increased for the third month in a row, albeit marginally, while outstanding business declined slightly. Output charges were cut for the third successive month, despite a faster rate of input price inflation in the sector, with a number of firms lowering tariffs to attract new clients.
After adjusting for seasonal factors, the HSBC China Services Business Activity Index posted 51.3 in July, unchanged from June, and signalled a further modest increase in business activity in the Chinese service sector. However, the rate of expansion remained weak in the context of historical data, and signalled the longest period of only modest growth since data collection began in late-2005.
New orders also increased over the month. Furthermore, the rate of new order growth accelerated to its fastest since March, following three successive months of slower expansions. According to anecdotal evidence, greater client demand boosted new business in the latest survey period.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
