Services Sector Grew in July, Caixin China PMI Shows

The report followed a downbeat official survey on Saturday which showed growth at manufacturing firms unexpectedly stalled, reinforcing views that the cooling economy needs more stimulus even as it faces fresh risks from a stock market slump.

“The euro zone economy showed reassuring resilience in the face of the Greek debt crisis in July”, said Chris Williamson, Markit’s chief economist.

The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) for July, which was announced on Monday, stood at 52.7, the highest since January, suggesting the manufacturing sector is picking up (see chart 1).

Yesterday’s construction PMI indicated a slowing from 58.1 to 57.1.

China’s factory activity is down to lower levels than initially estimated in July, shrinking the most in two years as new orders fell.

The survey, published by the Chartered Institute of Procurement & Supply and compiled by Markit, also shows that growth of activity in the services sector slowed between June and July. Nonetheless, the latest increase was only marginal and the confidence among Indian services firms deteriorated in July.

Said Annabel Fiddes, an economist at Markit: “Private sector companies in Singapore signalled a further robust expansion in output at the start of the third quarter, which in turn contributed to the first increase in staff numbers for five months”.

On the price front, input prices continued to rise in July and the rate of inflation accelerated from the previous month.

However, it remained below the average of 54.3 the sector has had since April 2013.

Exports, in both services and manufacturing, have been held back by weak growth in the Eurozone, the UK’s biggest export market.

The index remained above the 50 threshold that separates expansion from contraction for the fourth consecutive month.

The findings will give Bank of England policymakers plenty to chew over as they prepare a slew of announcements on Thursday about the economic outlook and interest rates.