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Repeats Story Initially Transmitted at 02:57 GMT Sep 5/22:57 EST Sep 4
     BEIJING (MNI) - Expansion of the Chinese services sector accelerated in
August as new orders and output increased, according to the latest survey of
purchasing managers jointly released by Caixin magazine and Markit.
     The headline index rose to 52.7 in August, up from 51.5 in July and the
strongest reading since 52.8 in May. 
     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 drop shown in the official
services PMI jointly released Aug. 31 by the China Federation of Logistics and
Purchasing (CFLP) and the National Bureau of Statistics (NBS). The official PMI
for August fell to 53.4 from 54.5 in July, ending 10 consecutive months of
readings above the 54 mark. Still, the reading was relatively strong. 
     For the Caixin services PMI, an increase in production and new orders were
the main sources of the growth, and the output index expanded from the middle of
the third quarter. 
     "The latest increase in new work was the fastest seen in three months and
solid overall, with a number of companies linking growth to improving market
conditions and new marketing strategies," Caixin said. 
     The employment index notably rose at the fastest pace for four months,
Caixin said. Services companies added to their payroll numbers for the 12th
month running.
     Input prices continued to rise, but at one of the slowest paces seen in the
past eight years, according to Caixin. 
     The pressure on operating capacity across services companies tightened
further due to more new orders, but the companies saw only a marginal rate of
backlog accumulation, which was the weakest in four months, Caixin noted. 
     However, prices charged by services companies declined because of fierce
market competition. Though the drop was slight, it was the first time that
prices had fallen for nearly a year and a half.
     Chinese services firms expressed stronger confidence in their outlook for
business a year ahead, and the level of positive sentiment rose markedly, Caixin
said.
     Caixin's China Composite PMI, which combines the results of the
manufacturing and services surveys, rose to 52.4 from 51.9 in July, the highest
rate in six months.
     The rise was led by a strong performance of the manufacturing sector. The
headline manufacturing PMI rose to 51.6 in August from 51.1 in July. It was the
strongest since 51.7 in February, according to data published by Caixin last
Friday.
     Input prices rose sharply at manufacturers. 
     "Notably, the rate of input price inflation at goods producers accelerated
to a five-month high, with a number of panelists commenting on higher raw
material costs," Caixin said. "Subdued cost pressures at services companies did
not offset the steeper increase in input costs at manufacturers, however, as
shown by composite input costs rising to the greatest extent since March."
     "The index of new business signaled a solid increase in workloads," said
Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary
of Caixin. "The recovery in both manufacturing and services has led the economic
outlook to continue to improve. But we need to closely watch whether the recent
rises in input costs will weigh on corporate profits and fuel inflation."
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
--MNI Beijing Bureau; +86 (10) 8532-5998; email: rich.dirks@marketnews.com
--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com