China’s Private Sector Growth At 4-Month High

China’s Private Sector Growth At 4-Month High

September 10, 2019

China’s private sector logged its fastest growth in four months in August as both manufacturers and service providers see improved rates of activity growth, survey data from IHS Markit showed Wednesday.

The Caixin composite output index climbed to 51.6 in August from 50.9 in July. A score above 50 indicates expansion.

Activity across the service sector advanced at a faster pace than that seen for the manufacturing sector. The services Purchasing Managers’ Index came in at a three-month high of 52.1, up from 51.6 in July. The reading was expected to rise marginally to 51.7.

Driven by services, the rate of new order growth was the fastest seen since April. Exports by services companies increased in August, while manufacturing firms posted the steepest fall since November 2018.

Headcounts increased for the first time since April as the expansion centered on services companies. Meanwhile, staffing levels were broadly unchanged in manufacturing.

At the composite level, the amount of outstanding work at Chinese firms increased slightly for the third successive month.

Average input costs faced by Chinese businesses gained at the softest rate for seven months in August. Reflective of the trend for input costs, output prices set by manufacturers declined, while services companies continued to raise theirs. Notably, factory gate prices fell at the fastest pace since late 2015.

Further, survey showed that Chinese firms were generally optimistic that output would increase over the next year. Nonetheless, the degree of positive sentiment was little-changed from July.

China’s economy showed clear signs of a recovery in August, especially in the employment sector, Zhengsheng Zhong, director of macroeconomic analysis at CEBM group said. Countercyclical policies took effect gradually.

However, the Sino-U.S. trade conflict remained a drag, and business confidence remained depressed. Still, there’s no need to be too pessimistic about China’s economy, with the launch of a series of policies to promote high-quality growth, said Zhong.

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