China services growth at six-month low in March, Caixin PMI shows

Activity in China's services sector slowed in March, prompting some economists to advise investors to be on the lookout for a turning point in economic activity in the second quarter.

Caixin's China services sector purchasing managers' index slipped from a reading of 52.6 for February to 52.2 in March - signalling the slowest pace of growth in six months.

Combined with the manufacturing PMI released earlier in the week, that saw the so-called composite PMI slip from 52.6 to a reading of 52.1.

The composite new orders index fell back to a four-month low, with service providers seeing the slowest rise in new business since last September, Caixin said, although goods producers continued to report "solid" order levels.

Staffing levels in services meanwhile saw their weakest rate of increase year-to-date and were "modest" overall, with work backlogs largely flat.

Composite price pressures for inputs on the other hand continued to rise at a rapid pace - albeit at their slowest clip since last October - with salaries said to be a key driver.

In parallel, output charges in services increased at their fastest pace since August 2015, but were nevertheless described as "marginal", while the rate at which goods producers increased their selling prices was the weakest in six months.

On a more positive note, Markit said that Chinese firms' overall degree of positive sentiment was still at one if its highest levels of the past two years.

Commenting on the China General Services PMI data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: "The Chinese economy continued to expand in March, but growth in both manufacturing and services slowed. Weaker increases in new business have clouded the economic outlook, and investors should watch closely for signs of a turning point in the second quarter."