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Pace of growth slows in China's services sector

By Abigail Townsend

Date: Wednesday 03 Feb 2021

LONDON (ShareCast) - (Sharecast News) - Growth in China's services sector slowed notably in January, data published on Wednesday showed.
The seasonally-adjusted Caixin China General Services Business Activity Index eased to 52.0 in January from 56.3 in December, the slowest rate of growth recorded in the current nine-month period of expansion.

The total amount of new work increased, but at the weakest rate since August, in part due to the slower export sales as global demand was hindered by the resurgence of Covid-19. Cases have also started to rise again in China.

Wang Zhe, senior economist at Caixin Insight Group, said: "The services sector's post-epidemic recovery continued, but at a much slower pace.

"Both supply and demand in the sector continued to expand, but at a slower pace. The gauges for business activity, total new business and new export business all fell for the second straight month. The gauges for total new business and new export business were the lowest in five and three months respectively.

"Service providers stayed positive overall about the economic recovery, but they remained worried about the uncertainties brought on by the epidemic."

Caixin's Composite Output Index, which combines both the services and manufacturing sectors, was 52.2 in January, compared to 55.8 a month previously.

"This year, we need to keep an eye on the effectiveness of domestic epidemic prevention, and look at how to add momentum to the Chinese economy as uncertainties about overseas demand continue," noted Wang.

Data published on Monday showed that China's manufacturing sector continued to grow in January, but at a slower pace, mirroring the services sector.