IHS Markit: Business Activity Slows in November

Services sector activity shrinks in November as GST weakens demand

Activity in China's services industries expanded at the fastest pace in three months in November, providing some support for the economy amid a slowdown in the manufacturing sector, a Caixin survey showed Tuesday.

"Businesses could no longer fight against the tide of higher prices for food, fuel and salaries as input cost inflation remained close to its strongest for six years, and businesses passed these increases on to consumers".

The Markit/CIPS purchasing managers' index (PMI) for services fell to 53.8, down from 55.6 in October. Any reading above 50 indicates expansion, while any figure below that signals contraction.

Businesses were also not as positive about the year ahead, he said, but now they are still "in expansion mode".


An indicator measuring new orders climbed to 57.3 last month from 56.6, a level not seen in nearly seven years.

On the price front, cost pressures faced by services firms intensified in November. If survey data remain buoyant in December, expect to see 2018 growth forecasts revised higher.

"But the big news is in relation to prices, which suggest that inflationary pressures have yet to peak".

"Given the strength of order book growth and hiring, as well as the elevated level of business optimism, the euro zone should start the New Year on a solid footing", he added. This, in turn, is prompting firms to further increase their headcount, pointing to a further decline in unemployment. "Germany and Spain have been outperforming the two other major EZ economies for most of this cycle, but these PMI data hint at a subtle shift in this theme".

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