China’s Caixin Services PMI rises beyond expectations in October


China’s Caixin October Services PMI came in at 51.2 vs 50.6 last and 50.8 expectations.

Summary – Services and Composite PMI data

The Caixin China Composite PMI™ data (which covers both manufacturing and services) pointed to only a marginal increase in Chinese business activity at the start of the fourth quarter. At 51.0 in October, the Composite Output Index fell from 51.4 in September to signal the weakest pace of expansion since June 2016. The softer increase in overall output was largely driven by a further slowdown in manufacturing production growth. Output at Chinese goods producers rose at only a marginal pace that was the weakest since June. Meanwhile, growth in Chinese services activity picked up from September’s 21-month low, but was modest overall and remained weaker than the historical average. This was highlighted by the seasonally adjusted Caixin China General Services Business Activity Index rising from 50.6 to 51.2 in October.

New business increased across both the manufacturing and service sectors during October. Growth in new work picked up slightly at manufacturers, helped in part by a stronger upturn in export sales, but remained moderate overall. Services companies meanwhile registered a modest increase in new order books that was similar to that recorded in September.

Commenting on the China General Services PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: “The Caixin China General Services Business Activity Index rose 0.6 points from the previous month to 51.2 in October. The sub-index of new business declined for the second month in a row, while the sub-indices of input prices and prices charged continued to go up. The Caixin China Composite Output Index, mainly dragged down by slower growth in output in the manufacturing sector, fell 0.4 points from September to 51.0 in October, the lowest level since June 2016. The Caixin PMIs for October showed that the economy had a relatively weak start to the fourth quarter. However, monetary policy is unlikely to be loosened unless major downside risks emerge.”

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