China's services sector slowed in December while
services in India contracted at the end of 2013, according to reports issued
Monday.
Chinese service firms reported increased business
activity in December. However, the rate of growth eased to a marginal pace that
was the weakest since August 2011. The latter was signalled by the HSBC China
Services Business Activity Index posting at 50.9 in December, down from 52.5 in
November.
Hongbin Qu, chief economist, China &
Co-Head of Asian Economic Research at HSBC said:
“Despite the moderation of the headline China Services PMI (purchasing managers'
index), which reflected slower new business growth, labour market conditions
improved for the fourth month in a row. We expect the steady expansion of
manufacturing sectors to lend support to service sector growth. Moreover, the
implementation of reforms such as lowering the entry barriers for private
business in service sectors and the expanded VAT reforms should help to
revitalise service sectors in the year ahead.”
In India, adjusted for seasonal factors, the HSBC
Services Business Activity Index fell from 47.2 in November to 46.7 in the
latest month, indicating a solid and accelerated rate of contraction. Moreover,
this was the sixth consecutive monthly drop in output levels, which is the
longest period of continuous reduction since the 2008/2009 global financial
crisis.
Underpinning the latest fall in services output
was a solid decrease in incoming new work. New business contracted at the
quickest pace since September, with panellists reporting an increasingly fragile
economy and competitive pressures. There were a few mentions that the upcoming
elections had also contributed to the latest drop in new orders. Across the
private sector as a whole, new business decreased at a faster, but moderate
pace.
Four of the six broad areas of the service
economy registered lower output volumes, while new business contracted in five
categories. As with the trend for output, the sharpest decline in new orders was
noted at Hotels & Restaurants. The Post & Telecommunication sub-sector remained
resilient, with growth of both business activity and new orders recorded.
Commenting on the India Services PMI survey,
Leif Eskesen, chief economist for India & ASEAN at HSBC said: “The service
sector continues to face head winds, with weakening new business dragging down
activity. On a positive note, inflation pressures are easing."
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