Growth in China's services sector activity slowed in August despite the summer travel peak, prompting some firms to cut staff amid concerns about rising costs,
Activities in China’s service sector expanded for the 20th consecutive month in Aug-24, with the PMI at 51.6. However, the pace of expansion was slower as the index fell from 52.1 in Jul-24 and below 52.2 predicted by market forecasts.
New business inflows continued to rise, particularly supported by foreign demand, but employment declined for the fifth time in seven months due to cost-cutting measures. Input cost inflation reached its highest since Jun-23, driven by rising material, wage, and transportation expenses.
In contrast, output prices fell amid strong competition. Despite these challenges, business confidence improved to a 3-month high, with optimism for better market conditions and expansion plans.
“We opine the slower activities lead to expectations for additional policy measures from the authorities to ensure more vigorous economic growth in China. Nevertheless, we view the continued expansion in the services sector as an encouraging signal, which indicates a sustained rise in consumers and businesses activities in China,” says MIDF.
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