China services sector growth eases more than expected in May

The private Caixin/Markit services purchasing managers' index fell to 52.7 last month from April's 15-month high of 54.5, missing consensus expectations for a reading of 54.0 and marking the lowest reading since February.

Still, it remained above the 50.0 mark that separates contraction from expansion.

The composite output index, which covers both the services and manufacturing sectors, slipped to 51.5 in May from 52.7 the month before.

Freya Beamish, chief Asia economist at Pantheon Macroeconomics, said: "There’s no telling where this thing could go in any given month, but consensus looked way too high on this occasion. The gauge is now around the middle of its absurdly broad range since mid-2017.

"The sub-indices were a mixed bag, but we are mainly interested in the employment component, which fell but remained above 50. This wasn't enough to prevent the composite employment gauge from slipping below 50 again, after three months above. The outlook for services employment is not great, with the backlogs of work element showing a further fall, albeit marginal.

"The price indices indicate demand weakness, with services firms continuing to raise their output charges only marginally, despite recent solid increases input prices, driven by labour and raw material costs.

"Degenerating relations with the US registered heavily, pushing the confidence sub-index to its lowest since July 2018. Overall, the PMI should fall further, infected by manufacturing weakness, but like we said, there is no telling where this thing will go month-to-month."