Recent data from Caixin and S&P Global has unveiled the results of a survey that sheds light on China’s Services Purchasing Managers’ Index (PMI) for October. The figures reveal that China’s service sector experienced only a marginal uptick in October, primarily due to sluggish sales and a slowdown in employment as private companies grapple with waning confidence.
China’s October service sector PMI stood at 50.4, marking a slight increase from the September figure of 50.2. However, this October PMI reading fell below the average observed in the first half of the year.
The survey conducted by Caixin indicates that new orders in the services sector grew at the slowest rate in 10 months during October. Sluggish sales have made companies more cautious about expanding their workforce. This cautious approach has translated into slower employment growth in the service sector, breaking a streak of consistent expansion over the previous eight months.
Earlier, on October 31, China’s National Bureau of Statistics (NBS) reported that the October service sector PMI had declined to 50.6 from the September figure of 51.7, further underscoring the challenges faced by China’s service industry.
Despite these challenges, China’s gross domestic product (GDP) for the third quarter of 2023 registered a growth rate of 4.9% year-on-year. This surpassed the expectations of analysts who had anticipated a 4.6% expansion. However, economists have expressed concerns regarding the Chinese economic outlook. Factors such as weakness in the real estate sector, decreased travel demand, local government debt issues, and ongoing geopolitical tensions all loom as potential influences on the Chinese economic landscape. As the year progresses, market observers will be closely watching how these factors may shape China’s economic trajectory.