China’s service sector continues to grow in August on improvement in new orders

China’s service sector continued to grow during the month of August, following improvement in new orders, according to results revealed by a survey on Monday.

China’s Caixin General Services Purchasing Managers’ Index (PMI) rose to 52.1 in August from 51.7 in July. However, the Caixin Composite Output Index, which reflects the health of both manufacturing and service sectors, fell to 51.8 from July’s 22-month high of 51.9. The number was dragged down by the manufacturing sector, which stalled last month.

The previously released Caixin China PMI for the manufacturing sector was 50, down from July’s 50.6. For service providers, new orders continued to increase in August compared with July, but the growth rate fell to a three-month low. Employment in the sector stabilized, after a marginal reduction in staff numbers in July.

"Overall, the economy continued to expand in August at a pace similar to the growth rate for July. But conditions in manufacturing and service sectors diverged again," said Zhong Zhengsheng, Director, Macroeconomic Analysis, CEBM Group, a subsidiary of Caixin Insight Group.

Meanwhile, manufacturing and services sectors witnessed a rise in input prices during August, although the rates of inflation were lower compared with the previous month in both sectors. While the world’s second-largest economy is expected to grow at a rate of 6.5 percent this year, downward pressure on China’s economy remains and supportive policies must continue, Zhong added.