Service sector PMI drops to two-year low service growth momentum weakened

The January China Services Purchasing Managers Index (PMI), published by HSBC yesterday, was 52, down 1.1 points from last December, Ma Wenting.　　This is only slightly higher than the November 2008 minimum of 51.2, well below the long-term average, indicating a weakening of the growth momentum in China's services operations.　　The services PMI index, based on a survey of purchasing managers in private services, aims to reflect the immediate state of the service sector, above 50 per cent indicating that corporate activity is expanding and below 50 means contraction in corporate activity. January data showed new business growth continued to slow at the start of the year, creating a 25-month low. The respondents said it was linked to a slowdown in new business growth and a relative weakness in customer demand.　　The backlog in the service sector has been lowered for 9 months, and the backlog in January is slightly lower than the long-term average. On the cost side, the average cost of investment in China's services continued to rise in January this year, with a strong increase over the long-term average. At present, the trend of rising costs has lasted for 15 months.　　Surveys show that rising costs are the result of a rise in human costs and a combined effect of raw material prices. The pressure of rising corporate costs is being passed on to consumers, and surveys show that China's service sector fees are also rising as costs rise.　　However, as competition has continued to constrain the pricing power of enterprises to some extent, the fare increase in the services sector in January is still slight.　　The latest figures show that China's service sector is confident about the outlook for the next year, but the optimism has fallen, and some of the respondents are pessimistic about the outlook for their business as they anticipate new business competition in the coming year. Qu Hongbin, HSBC's China chief economist and co-director of Economic Research Asia-Pacific, said the service PMI continued to fall to levels close to the financial crisis. It is likely that property regulation and monetary tightening have affected sentiment and curbed business activity. However, there is no need to worry about economic growth, supported by strong consumer spending and a large number of investment projects under construction. In fact, the easing of growth in services has helped to curb inflation in the service sector.