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HSBC China services PMI decreases to 51.9

Growth of China’s private sector cooled markedly in February, with growth the lowest in the current period of expansion, which now extends to nearly two years. This was signalled by the seasonally adjusted HSBC Composite Output Index falling from 54.6 to 51.9.

Posting 51.9 in February, down slightly from 52.0 in the previous month, the seasonally adjusted HSBC Business Activity Index was at a level indicative of only a modest rate of activity growth in China’s service sector.

February data pointed to another marked rise in average input costs faced by Chinese service sector firms. However, the rate of cost inflation was much stronger in the manufacturing sector, where purchase prices rose at the fastest rate since last November. Consequently, the overall rate of cost inflation quickened to a three-month high in February. 

Commenting on the China Services and Composite PMI data, Qu Hongbin, chief economist, China & co-head of Asian Economic Research at HSBC said: "China’s service sector continued to expand modestly in February, generating faster job creation. Slower growth of services new business will help to curb inflation while the tight labour market and rising business expectations warrant the robustness of services activities in the coming months."

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