China services PMI picks up less than expected

Activity in China’s services sector picked up less than expected in October, according to figures released on Friday.

The Caixin services purchasing managers’ index rose to 50.4 from 50.2 in September, coming in below consensus expectations for a reading of 51.0.

A reading above 50.0 signals expansion, while a reading below indicates contraction.

An official survey released earlier in the week showed that the services PMI fell to 50.1 in October from 50.9 in September.

Duncan Wrigley, chief China+ economist at Pantheon Macroeconomics, said: "China’s services sector recovery is likely to continue to ebb, after a marked reopening rebound this year. People have been more willing to spend on services than goods and are worried about the murky income outlook, amid the subdued labour market.

"China’s consumption-support policies have focused on the supply-side, such as putting on more concerts, car shows and domestic tourism facilities, which probably had more traction during the warm summer months. We see few short-term catalysts for consumption to lead growth, given that policymakers oppose cash handouts to households, which they see as encouraging laziness."