China’s service sector growth improved in October but the rate of expansion remained muted as new business logged the weakest rise in ten months and firms were more cautious about the economic outlook, the latest Purchasing managers’ survey data from S&P Global showed on Friday.
The headline Caixin services Purchasing Managers’ Index posted 50.4 in October. The reading improved from September’s nine-month low of 50.2. Nonetheless, the score signaled only a moderate growth.
The survey showed that new orders increased at the softest pace in ten months in October. Meanwhile, foreign demand increased the most in four months.
The slowdown in new orders forced service providers to take more cautious approach to staffing. Employment remained unchanged in October.
Levels of outstanding business increased further in October and the rate of accumulation was the most pronounced since January.
On the price front, the survey showed that input price inflation was the lowest since June 2022. Prices charged by companies remained on an upward trend in October.
Expectations regarding the 12-month outlook softened further in October. The level of optimism was the weakest since March 2020.
Overall private sector activity stagnated in September. The composite output index dropped to 50.0 from 50.9 in September.
“The economy has showed signs of bottoming out, but the foundation of recovery is not solid,” Caixin Insight Group Senior Economist Wang Zhe said. “Demand is weak, many internal and external uncertainties remain, and expectations are still relatively weak.”
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