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CHINA’S service activity in private firms weakened in February as the economy continues to slow, a survey showed yesterday.The Caixin Business Activity Index, a gauge of operating conditions in private service companies, was 51.2 last month, down from January’s six-month high of 52.4, according to the Caixin Magazine and research firm Markit.
This weakening followed the lower reading for the manufacturing sector as shown by earlier data. The Caixin China Purchasing Managers’ Index, which gauges operating conditions for private and export-oriented companies in the manufacturing sector, fell to a five-month low of 48 in February from 48.4 in January.
“They suggested China’s economy is still weak and unstable, and the government needs to push forward reform on the supply side in the service sector to release its potential,” said He Fan, chief economist at Caixin Insight Group.The component indexes in the business activity index showed service production again fell below 50 to 49.4, marking a contraction in output.
The increase of new orders was weaker, with some respondents commenting on relatively subdued customer demand.Meanwhile, the official non-manufacturing PMI, compiled by the China Federation of Logistics and Purchasing to reflect operational conditions in largely state-owned service companies, fell to 52.7 in February from 53.5 a month earlier.
China’s economy grew 6.9 percent, the slowest annual expansion in a quarter of a century, last year. To support the economy, the central bank on Monday cut reserve requirement ratio, or the amount of money banks need to hold in reserves, by 0.5 percentage points — to free around 700 billion yuan (US$107 billion) into the market. It was the first cut since October and the fifth since February last year.
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