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Growth of service sector in China at its fastest pace in 6 months

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Published on : Jun 03, 2014

According to an official survey, China’s service sector grew at its fastest pace in the past six months. This has led to a positive outlook at the China’s economy which could be settling after a few unsteady months.

The service sector in China which includes aviation and construction accounts for almost 43% of the total economy.

Purchasing Managers\' Index (PMI) helps to indicate the health of the sector. A reading of PMI higher than 50 points at expansion. The official non-manufacturing PMI in April was 54.8 which rose to 55.5 in May. Since, it is well above 50 points it is an expansion from a contraction in activity.

Official data also showed that the new orders compared to April’s PMI 50.8 rebounded to eight-month PMI high of 52.7. Also, business expectations PMI remained steady at a 60.7, compared to April’s PMI of 61.5.

China’s economy has experienced a disappointing growth this year. It was affected by volatile export growth and slow domestic investment and demand.

Apprehensive about the unemployment spike, the Chinese government has amended the policy in incremental moves in past months which led to positive changes. These include increased spending on China’s railway infrastructure and tax breaks for small and medium-sized companies.

One of the latest measure taken by the government is lowered level of cash which commercial banks are asked to deposit at the central bank, for more banks to increase lending and thus economic growth.

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