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An independent gauge of China’s services sector growth fell to its lowest level since May 2016 last month, pushing further below its official counterpart and indicating a softer start to the second quarter for the country’s economy as a whole.
The Caixin-Markit services purchasing managers’ index dropped to 51.5 last month, down from 52.2 in March and closer to the 50-point mark separating growth from contraction.
The dip marked the fourth consecutive month of weaker growth and broadened the Caixin gauge’s spread with an official services PMI sub-index, produced by China’s statistics bureau, to 1.1 points – the widest since December 2015.
The divergence was tracked by a dip from Caixin’s manufacturing PMI released on Tuesday, which at 50.3 marked its widest spread against the official manufacturing gauge since June 2016. In both cases, the Caixin gauge focuses primarily on smaller and private firms, while that from the National Bureau of Statistics primarily tracks larger, state-owned enterprises.
The independent services gauge fell in April despite a mild rebound in new order growth that followed a six-month low in March. However staff numbers grew at the slowest pace for the year so far and the first fall in backlogs of work for seven months.
Input costs decelerated to the slowest pace in six months, while output prices rose only marginally from their March levels.
Together the services and manufacturing readings brought Caixin’s composite index for business activity in China to 51.2 in April, down from 52.1 in March at the lowest reading in ten months.