BEIJING, March 5 China's services sector
ran at its fastest pace in four months in February, though
well-below its long-term trend despite an uptick in new business
growth to an eight-month high, a private-sector survey of
purchasing managers showed on Monday.
The reading contrasted with an official report on Saturday
that signalled that the sector was shrinking.
The private-sector HSBC China Services PMI, which provides a
snapshot of conditions in businesses from restaurants to banks,
climbed to a seasonally adjusted 53.9 in February from 52.5 in
January, well above the 50 mark that demarcates expansion and
"Despite this, service providers reported only a modest rate
of job creation, and again expressed below-trend confidence
about the short-term business outlook," British-based data
provider Markit, which compiles the index, said in a statement.
On the surface, the HSBC survey signalled a solid rebound in
China's burgeoning tertiary sector. But Markit injected an air
of caution about the findings, noting that the increase in new
orders was also much lower than the series average.
"Growth of services activities picked up to the fastest pace
in four months, thanks to a notable gain in new business. This
helped to lift new hiring and business expectations," Qu
Hongbin, chief economist for China and co-head of Asian economic
research at HSBC, said in a statement accompanying the data.
The survey found services firms continued to take on new
staff in response to rising workloads, with the sub-index
measuring job creation picking up in February from January. The
level of new business expected by respondents rose to a
Input price inflation hit a three-month high in February,
with respondents citing higher fuel and labour-related costs as
the main drivers. But the latest increase was slower than the
long-run series average.
The headline reading of the HSBC survey painted a different
picture to the official services PMI, which signalled a
contraction of the sector as the index fell to its lowest level
in a year, giving a reading of 48.4 versus January's 52.9.
China's National Bureau of Statistics said in a statement on
its website that soft demand for services in the wake of the
early Lunar New Year holidays was responsible for decline.
A pair of surveys covering the country's vast manufacturing
sector released last week showed that activity in big firms
bounced back in February on strong new export orders while
smaller companies lagged behind the rebound.
China's official manufacturing PMI rose to 51.0, above
expectations of 50.7, while the final reading of the HSBC
manufacturing PMI increased to 49.6 from January's 48.8.
Manufacturers' export orders showed a bigger divergence,
with the government's new export orders sub-index rising to 51.1
in February, the first indication of expansion in four months
and the highest reading since May 2011. The HSBC PMI export
sub-index slid to an eight-month trough of 47.5.
It is not uncommon for the two data series to diverge in
their findings. They use differing survey samples and the
government survey is only partly seasonally adjusted -- a vital
distinction given the Chinese Lunar New Year holiday disruption
to production cycles.
But it underscores investor uncertainty about the true
underlying pace of growth in the world's second-biggest economy.
"Combined with the still weak manufacturing activities amid
slowing external orders, the economy is still struggling, likely
to grow by around 8 percent year-on-year in Q1 before more
easing measures filter through into Q2," Qu at HSBC said.
Premier Wen Jiabao set an economic growth target of 7.5
percent for 2012 on Monday at the start of China's annual
meeting of parliament, the National People's Congress.
Analysts widely expect annual growth to slow to just over 8
percent in the first quarter of this year from 8.9 percent in
the last quarter of 2011, to mark the fifth consecutive quarter
Many analysts expect the central bank to continue its steady
policy easing by cutting the amount of cash that banks must hold
in reserve to crank up credit to ward off a sharper slowdown.
China announced a cut in its reserve requirement ratio by 50
basis points to 20.5 percent on Feb 18, releasing about 400
billion yuan ($63 billion) that could be used for bank lending.
It was the second 50-bp cut in the RRR in three months.
Feb Jan Dec Nov Oct Sep Aug Jul June May Apr
53.9 52.5 52.5 52.5 54.1 53.0 50.6 53.5 54.1 54.3 51.6