China December services PMI falls to four-month low

Thu Jan 2, 2014 10:39pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Koh Gui Qing and Jonathan Standing

BEIJING (Reuters) - Growth in China's services sector fell to a four-month low in December as business expectations dropped, a government survey showed, adding to evidence that the world's second-largest economy lost steam into the close of 2013.

The official purchasing managers' index (PMI) for the non-manufacturing sector dropped to 54.6 in December from November's 56, the National Bureau of Statistics said on Friday.

While the services PMI held above the 50 level that indicates expansion, slackening growth mirrors a fourth-quarter cooldown in factory activity and the broader economy as credit supply moderated and firms rebuilt inventories more slowly.

Ting Lu, an economist at Bank of America-Merrill Lynch in Hong Kong, said another factor was the fading effect of China's "mini" economic stimulus rolled out in mid-2013 to prop up slowing activity.

"There was pent-up demand in the third quarter and we don't expect it to be sustained in the fourth quarter," he said, adding he expected quarterly growth to ease to 2 percent in the December quarter, from 2.2 percent in the previous three months.

The services PMI follows two manufacturing PMIs out this week that showed growth in China's factories slowing in December as export orders weakened.

Friday's survey showed a sub-index for business expectations sagged to 58.7 last month from November's 61.3, dragged down by the property and water transportation sectors where firms expected activity to contract.

New orders held steady at 51, though the poll showed price pressures were building. A sub-index for intermediate prices climbed to 56.9 in December from November's 54.8, while prices charged rose to 52 from 49.5.   Continued...

 
Sales people negotiate with customers at booths selling mobile phones at a shopping mall in Beijing September 3, 2013. REUTERS/Kim Kyung-Hoon