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China`s private service activity rises in May

2015-06-04 13:42:15Source:Shanghai DailyAuthor:

China's service activity in private firms strengthened in May at the fastest pace in eight months, a survey showed Monday.

The HSBC Business Activity Index, a gauge of operating conditions in private service companies, stood at 53.5 last month, up from 52.9 in April, HSBC Holdings Plc and research firm Markit said. A reading above 50 means expansion.

The index indicated that service activities, including in hotels, restaurants, transport, storage, finance, post, telecommunications and rental, have risen in each of the past 10 months, and the latest growth was the strongest since September.

Qu Hongbin, chief economist for China at HSBC, said the improved service performance helped a modest rise in overall business activity.

"Service providers saw the fastest upturn of new business in three years last month, which supported a sharper growth of activity and employment," Qu said.

"But overall, growth momentum remained relatively weak, weighed down by an ongoing deterioration in manufacturing operating conditions. Therefore further stimulus measures may be required to keep up with an annual growth target of 7 percent."

The components showed that both business activity and new orders rose at faster rates at service providers but fell at manufacturers.

Deflationary pressure also eased, with prices falling more slowly in both service and manufacturing producers.

Earlier data showed that manufacturing activity in China's private and export-oriented companies improved in May but it was still in contraction.

The HSBC Purchasing Managers' Index posted 49.2 last month, up from 48.9 in April but still below the demarcation line of 50 for the third straight month.

The official non-manufacturing PMI, compiled by the National Bureau of Statistics, shed 0.2 points from April to 53.2 in May, showing less rosy performance in state-owned service firms.

China's economic growth slowed to 7 percent in the first quarter, the weakest quarterly rise in six years. The government has cut this year's growth target to around 7 percent.