Price Hikes, Weaker Demand Pull Services PMI to 10-Month Low
Xu Wei
DATE:  Sep 05 2018
/ SOURCE:  Yicai
Price Hikes, Weaker Demand Pull Services PMI to 10-Month Low Price Hikes, Weaker Demand Pull Services PMI to 10-Month Low

(Yicai Global) Sept. 5 -- China's Caixin-Markit services purchasing managers index, which measures sales, employment and inventory, slumped to the weakest reading in 10 months in August on less demand and increases in prices.

The services PMI was 1.2 points lower than expected at 51.5, as well as 1.3 percentage point less than in July, according to data released by market research firm IHS Markit today. A figure above 50 represents an expansion while a number below 50 means contraction.

The benchmark was at its the lowest since October last year. The manufacturing index, the other part for the total PMI, also sunk to its deepest in 14 months. There is a sign of "stagflation" in the economy, Zhong Zhengsheng, head of Monita Macro Research under Caixin Insight, told Yicai Global.

China's comprehensive PMI slid 0.3 percentage points to 52, the lowest figure in five months. Overall, the month of more contraction than expansion suggests pressures in commodity prices and that demand is cooling. Service sector's new business index rebounded slightly after a sharp decline last month, while the demand is still not aspiring.

Services' prices rose while adding pressures of increases in costs in the future. Manufacturers expected that during the next 12 months prices will increase, which was more said that last month when estimates were low. In the comprehensive PMI, both input and pre-tax factory price indexes have rebounded, and a pressure of rising commodity prices still exists. Future output index rebounded sharply after a drastic decline last month, which may relate to the marginal adjustment of macroeconomic policies.

Employment in the service sector, which is the Chinese people's main supporter of finding work, also picked up some of the earlier losses while finishing in the expansion zone.

Editor: Emmi Laine

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Keywords:   Caixin,PMI,INDEX,Macroeconomy,Markit,MANUFACTURING,Caixin-Markit