China Caixin Sept Services PMI Softens To Lowest In 21 Months

     BEIJING (MNI) - The expansion in the Chinese services sector decelerated in

September, as new orders and output growth decreased, according to the latest

survey of purchasing managers jointly released by Caixin magazine and Markit.

     The headline index fell to 50.6 in September, down sharply from 52.7 August

and the weakest reading since 50.2 in December 2015. 

     Readings above 50 indicate expansion in the services sector, and readings

below 50 indicate contraction. The higher the PMI reading above 50, the faster

the expansion in the sector. 

     The rise in the Caixin index contrasted with the rise shown in the official

services PMI jointly released Sept. 30 by the China Federation of Logistics and

Purchasing (CFLP) and the National Bureau of Statistics (NBS). The CFLP/NBS

services PMI rose in September to 55.4 from 53.4 in August, back above the 54

mark. 

     In like fashion, the Caixin manufacturing PMI fell in September, while the

CFLP/NBS index rose sharply. 

     For the Caixin services PMI, a slowdown in the growth of production and new

orders were the main sources of the deceleration, and the output index also

showed sluggish. 

     "Service providers saw only a modest upturn in new order books. A number of

companies mentioned that relatively subdued client demand had weighed on sales

at the end of the third quarter," Caixin said. 

     As a result, the employment index eased for the month, Caixin said.

Services companies expanded their payroll numbers at only a marginal pace.

     Input prices accelerated for the second month in a row, but the increase

was only marginal, according to Caixin. Prices charged by services companies

rose slightly because of the higher input prices, compared with a drop in

August.

     The pressure on operating capacity across services companies relaxed in

September due to the slowdown in new orders, after tightening in the previous

four months, Caixin noted.

     Chinese services firms expressed less confidence in their outlook for

business a year ahead, Caixin said.

     Caixin's China Composite PMI, which combines the results of the

manufacturing and services surveys, fell to 51.4 in September from 52.4 in

August, the lowest in three months, indicating the growth momentum of the

economy may be slowing. 

     "The slowdown was driven by weaker increases in output at both

manufacturing and services companies," Caixin said. 

     The composite subindex for new work increased at the weakest pace since

June and input price index surged to an eight-month high, mainly in the

manufacturing sector. 

     "The stronger cost pressures at manufacturers led factory gate charges to

increase sharply as firms sought to protect their margins," Caixin noted,

"Selling prices at the composite level subsequently increased at the fastest

pace since last December"

     "The Chinese economy generally held up well in the third quarter," said

Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary

of Caixin. "However, the expansion in both manufacturing and services cooled in

September, suggesting downward pressure on economic growth may re-emerge in the

fourth quarter."

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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