The HSBC China Services PMI for October has just been released and shows a fall to 52.9 down from September’s 53.5.
Certainly at 52.9 the services PMI is still in the expansion zone but the composite PMI, which combines both manufacturing and services in the Chinese economy fell to a three month low of 51.7 from 52.3 in September.
While manufacturing appears to be struggling once again Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said there were no such troubles for the service sector.
Both new and outstanding business improved, although the latter remained in contraction. Price pressures diverged as input prices continued to rise while output prices saw a marginal reduction. The employment index remained in stable expansion. Overall, the service sector grew steadily in October as the underlying business conditions continue to look better than in the manufacturing part of the economy.
While survey respondents in the service sector, “remained optimistic towards the 12-month business outlook,” the fact that input prices and output charges in both these surveys fell “at the fastest rates in seven months” suggests that the overall level of aggregate demand within the Chinese economy continues to fall.
Shanghai Shares are currently down 12 points to 2,419 for a loss of 0.44% soon after the open.