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China Service Sector Expands Most In 6 Months

ChinaPMI 020316

China's service providers experienced the fastest growth in six months in January but overall private sector activity was stable due to the ongoing contraction in manufacturing.

The Caixin General Services Purchasing Managers' Index rose to 52.4, the highest level since July, from December's 17-month low of 50.2, survey results from Markit showed Wednesday.

The Composite Output Index came in at 50.1 in January, slightly above the neutral 50-point level and up from 49.4 in December.

Improved inflows of new business underpinned the latest expansion of services activity. Meanwhile, the downturn in the manufacturing sector extended into 2016, with production declining for the second consecutive month.

Data showed that new orders increased at service sector firms but declined again at manufacturers. Consequently, composite business rose slightly after a two-month sequence of reduction.

Divergent employment trends were observed, with staff numbers rising at services companies but falling at manufacturing firms in January.

Both services providers and manufacturers reduced the prices they charged in January. The rate of discounting was marginal across the service sector, while goods producers cut their prices at a moderate pace.

Service providers were generally optimistic towards the one-year business outlook in January.

The government should continue to deepen reform, relax administrative controls and reduce restrictions on market entry for service providers," He Fan, chief economist at Caixin Insight Group, said. "This will release the potential of the services sector and help improve the economic structure."

Chinese authorities yesterday lowered the minimum mortgage down payment requirement for first-time as well as second-time home buyers, in yet another effort to boost the property market and slowing economy.

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