China February HSBC services PMI falls from four-month highs

Tue Mar 5, 2013 2:27am EST
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BEIJING (Reuters) - China's services sector cooled in February after new business receded from eight-month highs, a private survey showed on Tuesday, in line with slower factory activity that suggests a modest rebound in the world's second-biggest economy this year.

The HSBC Services Purchasing Managers' Index (PMI) fell to 52.1 from January's 54.0, after seasonal adjustments, but still held above 50 to show the increasingly important services sector was growing on a monthly basis.

Qu Hongbin, HSBC's chief China economist, attributed the pull-back in services growth in part to a clampdown on wasteful state spending by Beijing, such as forbidding officials from hosting extravagant meals.

He said distortions from the Lunar New Year holiday, which fell in February this year as opposed to January in 2012, may also have contributed to swings in the PMI data even though the series is seasonally adjusted.

"We expect a continuous modest improvement of service sector growth in coming months, thanks to healthy labor market conditions and the ongoing recovery of manufacturing growth," he said.

The services sector accounted for 46 percent of China's gross domestic product in 2012, as big as the country's better-known manufacturing industry and nearly three times its 17 percent contribution in 1990.

The HSBC Services PMI reinforces the message from separate services and manufacturing PMIs that suggest a recovery in the world's second-largest economy paused in February on unsteady foreign and local demand.

An official survey from the National Bureau of Statistics on Sunday showed China's non-manufacturing PMI fell to a five-month low of 54.5 in February, from January's 56.2.

That followed a pair of manufacturing PMIs last week that showed factory growth eased to multi-month lows in February as domestic demand dipped, weighing on firms already fighting slack foreign sales.   Continued...

A job seeker looks at her resume during a job fair at a convention center in Shanghai April 7, 2012. REUTERS/Carlos Barria