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China's private sector growth weakest in a year

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Staff Writer |
China service sector
Asia   Slower growth in services activity

China's private sector expanded at the slowest pace in a year in June largely reflecting the weakness in services activity, survey results from IHS Markit showed Wednesday.

The Caixin composite output index fell to 51.1 in June from 51.5 in May. Nonetheless, a score above 50 indicates expansion.

The Purchasing Managers' Index for the service sector slid to 51.6 in June from a four-month high of 52.8 in May, signaling the second-slowest increase in activity for 13 months.

"Even though the impact of slowing expansion in China's services sector was cushioned by a slight rebound in manufacturing activity, the downward trend in the economy remains entrenched," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said.

Slower growth in services activity coincided with a softer increase in new work in June.

At the composite level, new work increased at a moderate pace that was the slowest recorded in nine months.

Services companies signalled a further easing in the rate of employment growth at the end of the second quarter. The fall in manufacturing staff numbers more than offset job creation at services firms to push total employment lower for the third successive month.

Cost pressures eased across China's service sector in June, with companies noting the slowest rise in average input prices since October last year. At the composite level, input prices increased at a moderate pace that was slightly faster than May's 11-month low.

June data suggested only a marginal increase in output charges set by Chinese service providers. Composite output charges rose marginally in June, after broadly stagnating in the previous month.

Although activity and new orders expanded at slower rates, services companies remained optimistic towards the one-year business outlook in June. In contrast, positive sentiment weakened slightly in the manufacturing sector to its lowest since the end of last year.


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