China services sector booms in June, suggest economy steadying

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Activity in China’s services sector expanded at its fastest pace in 15 months in June, a private survey showed on Thursday, reinforcing signs that the broader economy is stabilising.

The services purchasing managers’ index (PMI) compiled by HSBC/Markit rebounded to 53.1 in June from 50.7 in May, well above the 50-point level that demarcates expansion in activity from contraction.

“The expansion in the service sector reinforces the recovery seen in the manufacturing sector, and signalled a broad-based improvement over the month,” said Qu Hongbin, chief economist for China at HSBC.

“We think the economy is slowly turning around, and expect the recovery to remain supported by accommodative policies on both the fiscal and monetary fronts over the coming months,” he added.

In a sign that the domestic economy is regaining some internal strength, a sub-index measuring new business jumped to 53.8 in June, the strongest expansion since January 2013.

Government data on the services sector released earlier in the day also pointed to continued strong expansion, though the pace of growth dipped slightly to 55 for June from 55.5 in May.

The findings follow upbeat readings from similar factory activity surveys earlier in the week which offered signs that the world’s second-largest economy is steadying as a flurry of government stimulus measures start to kick in.

Beijing has stepped up policy support in recent months to give a lift to economic growth, which dipped to a 18-month low in the first quarter.

Such measures include targeted reserve requirement cuts for some banks, quicker fiscal disbursements and hastening construction of railways and public housing projects.

“We should especially note the evident rebound in services businesses related to manufacturing activities,” Cai Jin, a vice president at the China Federation of Logistics and Purchasing — which compiles the official PMI — said in a statement on the agency’s official microblog Weibo account.

“New orders from commodity retailers showed a big rebound, indicating that the stabilising growth momentum in the factory sector is filtering into the services industry.”

Thursday’s HSBC/Markit survey showed firms in the services sector were generally optimistic about the 12-month business outlook. A sub-index gauging their sentiment picked up slightly in June from May’s 11-month low, though the reading remained weak in the context of historical data.

Stronger orders and the improving business outlook prompted services firms to hire more workers last month, as indicated by the employment sub-index, which rose to a three-month high.

Official data also showed companies remained confident, despite a slowdown in new order growth.

The services sector, which accounted for 45 percent of China’s gross domestic product in 2012 and roughly half of all jobs in the country, is expected to post steady growth in coming years as the economy matures.

However, some economists warn the economic recovery still appears patchy, with a cooling property market, sluggish exports and high local government debt levels remaining as key risks.

 

 

 

 

 

Source : Promarket News | July 3, 2014

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About thomasdinnocenzi

Thomas D'Innocenzi is a highly accomplished, results-focused senior international executive with extensive experience in global sourcing and market development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global sourcing operations worldwide. Extensive experience in international market development operations to accommodate rapid growth. Skilled in building top-performing teams, benchmarking performance, and restricting organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. As principal of Nova Advisors, LLC I’ve assembled an exemplary team that brings with them the knowledge and experience gained from starting up a Global Sourcing program with multiple Fortune 500 companies as well as the largest supplier network throughout the Asia-Pacific region. We have experience and expertise in more than a thousand medical and pharmaceutical products in manufacturing and sourcing at the best value. The right product, the right price point and the right branding fueled these successes that resulted in double-digit growth for top line sales and bottom line net margins for our customers. What sets us apart: • Our reach includes a large network of suppliers & manufacturers spanning 13 countries in Asia-Pacific region • We understand the manufacturing process and the business of the supplier and the buyer • Our company culture is based on quality assurance and our process is based on local quality control Our commitment is to be your partner offering the best products and services at the lowest cost. Contact me to discuss how we can make the global marketplace work for you. thomas@novaadvisors.com In addition, I am open to discussing opportunities in global sourcing, international marketing & sales, logistics and medical/pharma in Thailand, Vietnam, Malaysia, Philippines & Japan. Aside from my work I enjoy piano, astronomy, physics, and assisting my daughters with their studies. SPECIALTIES: Global Sourcing, Supply Chain Management, Business Development, Marketing, Logistics, Global Networking, Market Development, Healthcare Solutions, Pharmaceuticals, Medical Devices, Technology, Asia, Southeast Asia, US and Canada
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