Reed Cavendish Wealth Management - China Services Expand Amid Decreasing Employment

TAIPEI, Taiwan, October 10, 2018 (Newswire.com) - Analysts at Reed Cavendish Wealth Management say that although China’s services sector expanded at its quickest rate in three months last month due to increased demand, sentiment has deteriorated as businesses cut jobs after more than two years of growth and increasing price pressures point to decreased profit margins.

In September, the Caixin/Markit services purchasing managers’ index (PMI) increased to 53.1 in from 51.5 the month before, remaining above the 50 mark that separates contraction from growth.

Harvey Grace, director of private clients at Reed Cavendish Wealth Management, says the accelerated pace of expansion is a positive sign for an important area of China’s economy as it faces the fallout caused by the escalating trade dispute with the United States.

A recently released official report on the non-manufacturing sector for September indicated ongoing growth which Reed Cavendish Wealth Management analysts say was mostly fueled by an increase in construction.

A recent survey revealed that the majority of the increase in growth in the services sector was driven by a higher number of new business orders.

China is relying heavily on its services sector to reduce the economy’s long-standing dependence on investment and heavy industry. China’s policymakers have also been quicker to approve projects in an effort to bolster investment growth through infrastructure.

Reed Cavendish Wealth Management analysts say strong growth in China’s services sector would help to lessen the impact of U.S. tariffs on the country’s manufacturing sector. Last month, factory output in China stalled after 15 consecutive months of growth with export orders declining at their most rapid pace in more than two years.

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Source: Reed Cavendish Wealth Management