China service activity growth slows in January, Caixin reveals

Chinese service activity continued to grow in January but the pace of expansion eased from the previous month, according to a survey on Monday.

The Markit/Caixin services purchasing managers’ index fell to 53.1 in January on a seasonally adjusted basis from 53.4 in December.

However, it remained above the 50 level that separates an expansion in sector activity from a contraction.

“Falls in the output and new orders components were the main drivers of the drop in the Caixin index,” said Julian Evans-Pritchard, China economist at Capital Economics.

“Despite this, the export orders subcomponent actually rose to a two-year high, suggesting that improving external demand is helping to at least partially offset slower growth in domestic demand.”

The composite PMI, which measures services and manufacturing, also dropped to 52.2 in January from 53.5 in December.

Looking ahead, the survey showed service firms were optimistic about the business outlook for the next 12 months, reflecting expectations for increased client demand, planned company expansions and new product developments.