China services industry growth slows in December

Monday 06 January 2014 07.34
New surveys confirm that Chinese economy lost steam at the end of 2013
New surveys confirm that Chinese economy lost steam at the end of 2013

Growth in China's services industries slowed in December, two new surveys show today.

The surveys mirrored a slowdown in manufacturing and confirmed views that the world's second-largest economy lost steam at the end of last year.

The HSBC/Markit Economics services Purchasing Managers' Index dropped to 50.9 in December, its lowest since August 2011, from 52.5 in November, HSBC said. New business expansion was the slowest in six months.

The PMI follows a similar survey by China's National Bureau of Statistics on Friday, which showed a slowdown in service-sector growth to a four-month low of 54.6 from 56.

Both surveys follow two other PMIs last week that showed China's factory activity slowed in December, suggesting the moderation in the country's growth in the final quarter of 2013 was broad-based.

But all four measures remained above the 50 point level that separates expansion in activity from contraction.

China's economy has regained some momentum since the middle of the year after a protracted slowdown. While it was expected to lose steam as the government reins in rampant credit growth and demand for China's exports remains subdued, activity has remained resilient into the December quarter.

Beijing has said it will accept slower growth as it tries to reshape the economy towards more sustainable growth, based on consumer demand, after three decades of breakneck expansion led by exports and credit.

China's economic growth is likely to come in at 7.6% in 2013, the government has said, just above the official target of 7.5% and slightly below the 7.7% in 2012. Data for last year's GDP is set to be released on January 20.

The weaker PMIs added steam to a fall in Asian markets today, on concern over whether China's slowdown will continue into the first quarter.