Service sector activity in China accelerated in March

Service sector activity in China accelerated in March, but employment in the sector fell for the first time in over two and a half years. The survey results show mixed signals about the condition of the sector amid Beijing’s efforts to counteract the continued weakness in manufacturing. Purchasing Managers’ Index (PMI) for March increased from 51.2 points in February to 52.2 points in March, as new companies continue to increase at a moderate pace. However, the sub-index for new appointments decreased from 51.3 to 48.9 points, which is the first contraction in employment since August 2013. Any value below 50 points signal for contraction, while over 50 points show expansion.

Some companies say they do not appoint new people to seats falling vacant by voluntarily resigning employees, others cut staff due to weak activity in the business.

Overall the service sector is doing well, but the economy suggests that there is no sound basis for recovery. The government should speed up reforms in terms of supply, to promote the development of emerging industries.

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