![Chinese services activity picks up slightly in October - Caixin PMI](https://i-invdn-com.investing.com/trkd-images/LYNXMPEJA2019_L.jpg)
©Reuters. Workers prepare meat and vegetables in a kitchen of a hot pot restaurant in Beijing, China, April 8, 2022. Photo taken April 8, 2022. REUTERS/Tingshu Wang/File Photo
BEIJING (Reuters) – China’s services activity grew at a slightly faster pace in October, a private sector survey showed on Friday. Sales grew at the slowest pace in ten months and employment stagnated while business confidence declined.
China’s huge services sector, which provides about 48% of jobs, staged a strong recovery earlier this year, but analysts say sluggish household income growth and an uncertain labor market raise questions about the sustainability of the sector’s growth.
The Caixin/S&P Global Services Purchase Managers’ Index (PMI) rose to 50.4 in October, up from a September low of 50.2. The growth rate also remained much slower than average in the first half of the year.
The 50 point mark separates expansion from contraction of activity.
An official survey showed on Tuesday that the services PMI fell to 50.1 from 50.9 in September.
“The services sector, which is strongly linked to youth employment, recovered by 90% to pre-coronavirus levels,” said Xing Zhaopeng, senior China strategist at ANZ.
“However, the sector is unlikely to see an above-expected recovery,” he added.
New orders in the services sector rose at the weakest pace in 10 months last month, the Caixin survey showed, offsetting the rise in the travel boom during the eight-day national holiday.
However, there was a further improvement in foreign demand for Chinese services, amid reports of increased numbers of foreign visitors.
The slowdown in sales growth led to a more cautious approach to corporate recruitment. Employment in the sector was unchanged in October, after growing in each of the previous eight months.
Due to subdued demand, overall optimism fell for the fourth month in a row and was the lowest since March 2020.
Prices charged by service companies rose faster as they tried to pass on higher input costs to customers, although input inflation was the slowest since June 2022.
The Caixin/S&P composite PMI, which includes both manufacturing and services sectors, fell to 50.0 from 50.9 in September, the lowest since December 2022.
“Market conditions for the manufacturing sector were slower compared to those for the service sector,” said Wang Zhe, economist at Caixin Insight Group.
China’s economy posted better-than-expected growth in the third quarter, but economists say weak real estate, weakening travel demand, local government debt and geopolitical tensions could weigh on the outlook.