BackChina’s January services growth slows to five-year low
The official non-manufacturing PMI slipped to 53.4 from December's reading of 54.6
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Beijing: Growth in China’s services sector slowed to a five-year low in January, an official survey showed, another sign of stuttering momentum in the world’s second-largest economy that could deepen investors’ concerns about emerging markets around the world.
The National Bureau of Statistics said the official non-manufacturing Purchasing Managers’ Index (PMI) fell to 53.4 in January from December’s 54.6.
Monday’s reading was the lowest since December 2008, although it was still above the 50 point level that indicates growth.
The survey is the third in two weeks to show sluggish activity in China, and will affirm expectations that the country’s economic growth will soften into 2014.
The tapering of the US Federal Reserve’s stimulus has been a negative for emerging markets, and investors have sold stock and currency investments and moved them to developed markets. Signs of slowing or weak activity in China and other major emerging markets are further hastening this shift.
New year effect?
The cooling growth in the services sector ahead of the Lunar New Year, China’s biggest holiday, echoed a slowdown in its factories and could see investors further pare their exposure to emerging markets.
Over the weekend, a government survey showed growth in Chinese factories slipped to a six-month low in January.
Though some economists cautioned the pull-back in production could be due to factories closing early to celebrate the Lunar New Year holidays, which began last week, others said anaemic underlying demand also reduced output.
Monday’s data showed moderating confidence among service providers, with the business expectations sub-index fell to 58.1 from December’s 58.7, the lowest reading since February 2009.
Firms also drew slightly less business in January. A new orders sub-index nudged down to 50.9 from December’s 51.
Retailers and the air and rail transport sectors had strong months, with output sub-indices for all three above 60, while a drop below 50 points indicated a contraction in the real estate sector.
Slowing activity was accompanied by moderating price pressures. The sub-index for input prices fell to an eight-month low of 54.5, and the index for prices charged dropped to 50.1.
Analysts polled by Reuters expect China’s economy to grow 7.4% in 2014, slightly slower than last year’s 7.7% expansion and the weakest in 24 years.
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