Asia Economy

China April Caixin services PMI moderates to 51.8 from March's 52.2

The China Caixin services purchasing managers' index (PMI) came in at 51.8 for April, continuing to show expansion but marking a moderation from 52.2 in March.

A reading above 50 indicates activity is growing, while one below that level suggests a contraction.

The Caixin reading is broadly in line with the official services PMI, released at the weekend, which came in at 53.5 for April, down from 53.8 in March. The Caixin survey focuses on small- and medium-sized enterprises, while the official data tracks larger companies.

While the Caixin services survey's cousin, the manufacturing PMI, tends to be more closely watched, China's pivot toward domestic consumption and away from a manufacturing- and investment-led growth means the service sector, which includes consumer industries such as real estate, retail and leisure, has become the majority of the mainland economy. It is also a key barometer of consumption, accounting for more than 50 percent of gross domestic product (GDP).

The continued expansion of the services sector comes after China's policymakers bolstered growth over the past year through a flurry of interest rate cuts and reserve requirement ratio (RRR) reductions for banks, as well as other stimulus efforts.

That was reflected in the pace of new order growth quickening to the strongest rate in three months, with 12 percent of respondents recording higher new business compared with less than 3 percent seeing a decline.

The positive performance of the services sector has been countered by a continued manufacturing contraction.

The Caixin Manufacturing PMI, released earlier this week, fell to 49.4 in April from 49.7 in March. Economists polled by Reuters had forecast a reading of 49.9. It was last in expansionary territory in February 2015.

The official manufacturing PMI printed at 50.2 in April, the second successive month of expansion, the weekend's figures showed.

The Caixin China Composite PMI, which includes both manufacturing and services, expanded for a second month, the data released Thursday showed, but it slowed to 50.8 from March's 51.3.

"Expansion in the services sector helped offset some of the impact caused by flagging manufacturing, He Fan, chief economist at Caixin Insight Group, said in the statement accompanying the data.

"Overall, however, the economy still faces relatively strong downward pressure. The government needs to keep implementing moderate stimulus to prevent a hard landing of the economy."

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