Snail pace of business China witnessed sluggish growth since 2014
Snail pace of business: China witnessed sluggish growth since 2014

According a private survey, China’s service sector grew at its slowest pace in 21 months in September 2014. The pace of new business grew slowly than in the previous month.

The survey was in sharp contrast to an official figure of the non-manufacturing sector. It showed, the services sector expanded at the swiftest clip since September 2014. It was unclear as to find out the performance of a key part of the economy.

The Caixin/Markit services purchasing managers’ index (PMI) dropped to 50.6 in September 2014, the lowest reading since December 2015. It was one of the weakest since the survey began in 2005.

A reading above 50 indicates growth and any lower than that signals contractions. The index hit a three month high of 52.7 in August 2014.

New business in September, in the same year, grew at a slower pace than in the previous month. Backlogs of work declined for the first time in five months and hiring slowed.

As per the survey, the service sector witnessed much less inflation than the manufacturing industry.

Input price inflation for services firm, picked up slightly from August while prices charged also rose only marginally after falling in the same month.

The country is counting on growth in services, especially high value-added services in finance and technology. This will reduce China’s heavy reliance on heavy industry and investment.

The survey also showed growth in the manufacturing sector last week but slowed in September. The factory activity grew faster than services.

“The Chinese economy generally held up well in the third quarter,” Zhengsheng Zhong said, director of macroeconomics analysis at CEBM.

According to Zhong, the expansion in both manufacturing and services cooled in September, suggesting a downward pressure on economic growth may re-emerge in the fourth quarter.

China’s central bank cut some amount of cash that some banks hold, as a reserve for the first time since February 2016. This was done to encourage more lending to smaller firms and energize the sluggish private sector.