Asia Economy
Services slowed in China, contracted in Japan and stagnated in India in October
By Michael Hennigan, Finfacts founder and editor
Nov 5, 2014 - 5:54 AM

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PMI survey data published Wednesday showed that services slowed in China, contracted in Japan and stagnated in India in October.

HSBC China Composite PMI (purchasing managers' index) data (which covers both manufacturing and services) signalled an increased level of business activity in China for the sixth successive month in October. That said, the HSBC Composite Output Index posted at 51.7 (down from 52.3 in September), and indicated only a modest rate of expansion that was the slowest in three months.

Growth was supported by increases in business activity across both the manufacturing and service sectors in October. That said, manufacturing output expanded at a marginal pace that was the weakest in five months. Growth of service sector activity also slowed in October, but remained solid overall. This was highlighted by the HSBC China Services Business Activity Index posting at 52.9 in October, down from 53.5 in September. Manufacturers and service providers both registered an increased amount of new work during October. However, the rate of new order growth at goods producers edged down to a five-month low. Meanwhile, growth of new work at service providers was little-changed from September and solid. The development of new projects and increased client demand was linked to the latest rise in new workloads.

Latest data signalled a contraction in activity at Japanese service providers for the fifth time since the sales tax was implemented in April. Activity was partly driven lower by poor weather. On the other hand, new orders remained in growth territory for the fifth successive month, although growth was the lowest in the current sequence of expansion. Following a similar trend, payroll numbers also weakened at Japanese services firms in October. The headline seasonally adjusted Business Activity Index posted at 48.7 in October, below the crucial 50.0 no-change mark and down from 52.5 in September. The rate of decline was marked and the fastest since April when the sales tax increase was implemented. The decline in activity was, however, partly the result of poor weather (typhoons).

The latest figure indicated that growth of private sector output in India eased to the weakest in five months. Business activity at service providers stagnated during the month, while manufacturers reported an accelerated expansion in output.

Adjusted for seasonal factors, the headline HSBC India Services PMI Business Activity Index – a single question tracking changes in activity at Indian services companies on a month-by-month basis – fell from 51.6 to exactly 50.0 in October. The latest reading indicated a stagnation in business activity, following five successive months of growth. Anecdotal evidence linked variations in activity to changes in order book volumes. Among the monitored sub-sectors, the best-performing was Post & Telecommunications, whereas activity fell quickest in Hotels & Restaurants.

Underpinning the stagnation in activity was weaker growth of new business. Despite rising for the sixth consecutive month, new work intakes in the Indian service sector increased at the weakest pace since May during October. Meanwhile, new order growth at manufacturers picked up to a solid rate. Consequently, new business across the private sector as a whole rose for the sixth month running.


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