China service sector growth improved in January, driven by stronger growth in new business, survey data from S&P Global showed on Wednesday.
The headline RatingDog services Purchasing Managers’ Index rose to 52.3 from 52.0 in December. The latest rise in services activity was the strongest in three months.
“The Services PMI is expected to remain in expansionary territory,” RatingDog Founder Yao Yu said.
“The sustainability of the service sector’s recovery will still depend on the strength of domestic demand improvement,” Yu added.
There was a stronger rise in new business largely due to the successful promotional activities and greater client interest. External demand conditions rose for the second time in the past three months, partly due to new product launches.
Headcounts increased for the first time in six months in January. With greater labor capacity, outstanding business accumulated at a marginal pace despite acceleration in new business growth.
Regarding prices, the survey revealed that input costs of service providers continued to increase. However, the rate of cost inflation eased to a five-month low to indicate only a slight rise in costs. Average output charges were broadly stable in January.
Business sentiment in the service remained positive in January as companies were hopeful that business expansion plans and better market conditions would help to drive continued growth in sales and activity over the coming twelve months.
Overall private sector activity logged a faster growth at the start of the year. The composite output index posted above the 50.0 no-change threshold at 51.6 in January, up from 51.3 in December.
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