China’s private sector growth slid to a five-month low in August on slower growth in services, survey results published by IHS Markit revealed Wednesday.
The Caixin composite output index fell to a 5-month low of 52.0 in August from 52.3 in July. A score above 50 indicates expansion.
The services Purchasing Managers’ Index dropped to 51.5 from 52.8 in the previous month. The reading was expected to fall moderately to 52.6 in August.
August’s PMI readings indicated that the effects of expansionary credit policy and active fiscal policy are yet to kick in, Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group said.
Signs of stagnation emerged as upward pressure on prices remained even though demand weakened at a faster rate, Zhengsheng added.
The survey showed that manufacturing output rose at the quickest rate since January, though growth remained moderate overall. Business activity at services companies increased at the weakest pace since October 2017.
The rate of expansion in new business remained moderate in the service sector, despite improving from July’s 31-month low. At the same time, new order growth in manufacturing was the weakest since May 2017. As a result, new orders at the composite level expanded at the slowest rate in 26 months.
Job creation across the service sector continued to contrast with further job shedding at manufacturers in August. Consequently, composite employment fell for the third successive month, though only slightly.
Stronger rises in input costs were seen across both the manufacturing and service sectors in August.
Prices charged by Chinese companies also rose further in August. Factory gate prices increased moderately overall, despite the rate of growth quickening from July.
Meanwhile, the pace of charge inflation across the service sector was marginal and similar to that seen in the previous month. As a result, composite output charges rose for the fifteenth month running.
Although overall sentiment towards the 12-month business outlook improved slightly from July’s recent low, confidence remained relatively subdued in the context of historical data.