China services gauge slows after boost from new year holiday

[BEIJING] China’s services activity expanded at a weaker pace in March, a private survey showed, pointing to sluggish consumer demand after a lift from a long national holiday the previous month.

The RatingDog China services purchasing managers’ index (PMI) fell more than expected to 52.1 from 56.7 in February, according to a statement published Friday (Apr 3). The median forecast of economists surveyed by Bloomberg was 53.6, above the 50 mark separating expansion from contraction. 

The official PMI survey showed service business activities picked up last month, with gains largely driven by producer services including finance.

Consumer services such as retail and catering remained in contraction, according to a National Bureau of Statistics statement. China had a nine-day Lunar New Year holiday in February that boosted services spending, particularly in the tourism sector.

Services companies in the private survey saw a slight rise in input prices driven by higher costs of fuel, materials and labor. But they still reduced their selling prices for the third time in four months in order to boost sales, according to a statement.

China’s consumer spending booked the worst start to any year outside the pandemic, highlighting the challenge to a government that has targeted a bigger role for domestic demand.

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Beijing meanwhile has repeatedly pledged to rebalance its economy toward consumption, where ramping up services is central. 

China’s authorities modestly scaled back fiscal stimulus plans for this year as they lowered their annual growth target to 4.5 to 5 per cent – the least ambitious goal since 1991, though from a much larger base of gross domestic product. BLOOMBERG