Sept service sector activity falls: Caixin China general services PMI

Subdued overall market conditions led firms in China to trim their staffing levels again in September, while backlogs increased slightly. At the same time, companies signalled only mild increases in input costs and output charges.

Although companies generally anticipate business activity to rise over the coming year, the degree of optimism dipped to its lowest since March.

At 49.3 in September, the seasonally adjusted headline business activity index fell from 55 in August and signalled a fresh decline in service sector activity across China.

Though only slight, it marked the first reduction in output since May, and contrasted with steep increases in activity in the prior three months, S&P Global said in a press release.

Total new work fell for the first time in four months, albeit modestly.

COVID-19 containment measures, including lockdowns, temporary closures and mobility restrictions, were all said to have dampened customer demand and client numbers in September.

An improvement was seen with regards to external demand, however, as new export business expanded slightly at the end of the third quarter, with some firms noting improved demand across some international markets.

Though modest, the rate of job shedding was the quickest seen since May. Although staffing levels fell, companies signalled little pressure on operating capacities. Outstanding workloads rose only marginally for the second month in a row.

The rate of inflation edged down to the lowest since June and was only mild. Fees charged by services companies rose at the quickest pace for five months in September, as some firms looked to pass on higher expense to clients. Nevertheless, the rate of inflation remained marginal overall.

Business confidence regarding the 12-month outlook for business activity moderated to a six-month low in September. While many firms were confident of a strong post-pandemic recovery over the next year, others expressed concerns over how long the virus and containment measures will impact operations and customer demand.

ALCHEMPro News Desk (DS)