By Gabriel Crossley
BEIJING (Reuters) – Activity in China’s services sector accelerated to a seven-month high in November, as new business, especially new export business, picked up, a private survey showed on Wednesday.
Beijing has been counting on the services sector, which accounts for more than half of China’s economy, to partly offset sluggish domestic and global demand for manufactured products as a prolonged trade war with the United States drags on.
The Caixin/Markit services purchasing managers’ index (PMI) rose to 53.5 last month, the quickest pace since April, from 51.1 in October. It has stayed above the 50-point margin that separates growth from contraction on a monthly basis since late 2005.
The stronger performance points to easing pressure on the services sector, which had been faltering in recent months amid the broader economic slowdown. The November reading for the official non-manufacturing PMI, published by the National Bureau of Statistics, also picked up from a multi-year low the month before.
The Caixin reading signals a recovery in activity across the services sector, according to Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group.
The indicator for new export business rose to a four-month high, with overall new business picking up, too.
But the measure for business expectations, despite rising on the previous month, was “still lower than the long-term average, reflecting depressed business confidence,” said Zhong.
The gauge for employment edged down from the previous month but remained in expansionary territory.
Caixin’s composite manufacturing and services PMI, also released on Wednesday, rose to 53.2 in November from 52.0 in the previous month, marking the highest reading since February 2018.
Its factory gauge, released on Monday, showed the fastest expansion in almost three years, though analysts were not convinced the worst is over yet for Chinese manufacturers.
“But business confidence remained subdued, reflecting the impact from uncertainties generated by the China-U.S. trade conflicts. That will restrain a recovery in economic growth,” said Zhong.
Weighed down by slowing investment and the escalating trade war with the United States, China’s economic growth has cooled to near 30-year lows. Analysts widely expect it will drop below 6% next year for the first time since 1990.
(Reporting by Gabriel Crossley; Editing by Kim Coghill)