China's Services Sector Growth Slows Amidst US Tariff Concerns
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China's services sector growth eased in November, according to a private sector survey, as the economy grapples with multiple challenges and anticipates the impact of increased US tariffs under the incoming Trump administration, reports Reuters.
The Caixin/S&P Global services purchasing managers' index (PMI) fell to 51.5 in November, down from 52.0 in October, though it remained above the 50-mark indicating expansion. This aligns with the official PMI released earlier, which showed non-manufacturing activity weakening to 50.0.
China's economy has faced persistent headwinds this year, including a prolonged property market downturn, local government debt concerns, and weakening global demand. Beijing has responded with a series of policy measures aimed at stimulating economic growth, including fiscal support and monetary easing.
However, the threat of significantly higher US tariffs on Chinese imports under President-elect Donald Trump has introduced fresh uncertainty.
"Service providers generally expressed confidence in market improvement amid policy support, although some were concerned about the future trade environment," noted Wang Zhe, Senior Economist at Caixin Insight Group.
The survey revealed a decline in the new business sub-index to 51.8, down from 52.1 the previous month. New business inflows from abroad also slowed.
Despite these challenges, companies continued to hire additional staff for the third consecutive month, and overall business confidence rose to its highest level in seven months. Firms also reduced selling prices due to competition and benefited from lower material costs, leading to a decrease in average input costs.
Wang Zhe cautioned that while the economic recovery gained some momentum in November, downward pressure on growth persists.
"The structural and cyclical pressures facing the economy are expected to continue, coupled with the likelihood of continued accumulation of external uncertainties, which requires sufficient policy buffers," Wang stated.
The Caixin/S&P Global Composite PMI, encompassing both manufacturing and services sectors, edged up to 52.3 from 51.9, driven by faster expansion in manufacturing.