China HSBC PMI Services Index Indicates Sector Expansion Is Slowing

Posted on December 5, 2011

Service sector activity in China slowed in November according to the HSBC PMI survey. The PMI Services Index  posted 52.5 in November, down from 54.1 in October, and showed that new business was still growing, albeit at a slower rate. Order backlogs also started growing again after falling for 18 months. This is keeping employment as well as prices rising in China’s service sector.  

Things are a little less rosy in China’s manufacturing sector. The Markit® PMI manufacturing index fell from 51.0 in October to a 32 month low of 47.7 in November. New orders dropped at their fastest rate in 32 months while output declined for the first time in four months. The rate of decline was steep. This reduction in output led to higher order backlogs, although the rate of increase was slight. This under capacity could lead to higher employment, which rose only fractionally during the month. Prices for raw materials began falling in November, joining already declining selling prices.

PMI Index Aug Sep Oct Nov
Manufacturing  49.9 49.9  51.0 47.7
Services  50.6 53.0  54.1 52.5