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China Services PMI Rises To 51.9 In March

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The service sector in China expanded at a faster pace in March, the latest PMI from HSBC and Markit Economics revealed on Thursday, coming in with a four-month high score of 51.9.

That's up from 51.0 in February, and it moves farther above the boom-or-bust line of 50 that separates expansion from contraction.

The employment sub-index moved higher for the first time in five months, the data showed, while input costs declined at manufacturers but gained at service providers. Manufacturers' new orders fell at the strongest rate in 28 months.

Outstanding business fell for the second month in a row at manufacturers, albeit marginally. Backlogs of work also decreased slightly at service sector firms. Input costs faced by Chinese manufacturers fell at the sharpest rate since August 2012.

"The HSBC China Services PMI suggests a modest improvement of business activities in March, with employment expanding at a faster pace. However, combined with the weaker manufacturing PMI reading, the underlying strength of the economy is softening, which should ultimately weigh on the labor market," said Hongbin Qu, HSBC Chief Economist, China & Co-Head of Asian Economic Research.

Output charges fell sharply in China's manufacturing sector, with a number of panelists citing lower input costs and competitive market pressures. In contrast, service providers increased their selling prices for the second month in a row, albeit marginally.

The composite PMI dipped to 49.3 in March from 49.8 in February, falling for the second straight month.

Data for March signaled that the reduction in overall business activity was driven by the manufacturing sector, which posted its sharpest contraction of output since November 2011.

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