China revised official services PMI shows healthy growth

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A revised version of China's non-Manufacturing Purchasing Managers' Index (PMI) that is seasonally adjusted showed the services sector grew last month to extend a healthy pace of expansion seen this year, with the index hitting 58 in March.

The China Federation of Logistics and Purchasing said on Tuesday the revised services PMI rose in March from February's 57.3 and January's 55.7.

The growth trend in the revised services PMI is markedly better than the original series, which was not seasonally adjusted and had shown the index falling to 48.4 in February from January's 52.9.

A PMI reading below 50 indicates contracting activity while a reading above 50 shows expansion.

The new export orders sub-index also showed a healthy pace of expansion, rising to 53.5 in March from February's 52.7 and January's 52.2.

The Federation did not explain why it decided to revise the services PMI, except to say it has collected enough data to allow it to seasonally adjust the series.

Growth in the services sector comes days after China's big factories were shown to be surprisingly busy in March as new orders lifted the official manufacturing PMI in March to an unexpected 11-month high of 53.1.

But analysts cautioned not to read too much into the figure as it was helped by an expected bump as winter ends. A separate survey that showed credit-constrained small factories struggling also suggested the economy is still losing steam.

The services PMI index is intended to provide a snapshot of conditions in the services sector, which accounts for less than 45 percent of China's economy, a much smaller share than in developed countries.

China's economy faces formidable headwinds as exports falter due to weakening demand in the United States and Europe, alongside a downturn in the once red-hot property sector in response to tightening steps by Beijing.


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