Activities in China’s services sector expanded slightly month-on-month in June according to official data.
The National Bureau of Statistics said the services Purchasing Managers’ Index (PMI) rose to 53.8 in June from 53.2 in May, while its new orders sub-index rose to 51.3 in June from 49.5, as Beijing introduces measures to support the economy. The 50-point level separates contraction from expansion.
But factory output stayed at the same level as May, according to the Bureau. The factory PMI stood at 50.2 last month, unchanged from the May reading.
Zhao Qinghe, a senior statistician at the Bureau, nonetheless highlighted it was the fourth month in a row that the factory gauge had stayed above the 50-point level. But he warned in a statement: “The business development momentum is still insufficient, and the demand in both the domestic and foreign markets remains weak.”
Chinese state-run news agency Xinhua quoted HSBC analyst Annabel Fiddes saying there were signs of improvement in overall market demand in the factory sector but it was “likely that more stimulus measures will be required to ensure that the sector regains growth momentum and to encourage job creation”.
Chinese Premier Li Keqiang said in Paris this week he is “confident” the nation would achieve the target of around 7 percent economic growth this year. “We will adopt appropriate measures at an appropriate time,” he said, quoted by Chinese state media.
The central bank, the People’s Bank of China, announced an interest rate cut on Saturday, the fourth rate cut since November. The central lender that day also lowered the reserve requirement ratio – the cash amount banks are required to hold as reserves. The moves were said to be in support of the economy, which expanded by 7 percent in the first quarter, the slowest pace in six years.