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BEIJING, Dec 5 (Reuters) - - Growth in China’s services sector activity picked up to a three-month high in November, buoyed by a solid rise in new business, though the rate of expansion remained moderate and weaker than the long-run trend, a private survey showed on Tuesday.
The upbeat findings broadly echo those of an official gauge of the non-manufacturing sector last week that showed activity accelerated at a faster rate in November, reinforcing the view that an expected slowdown in the broader economy would be gradual.
The Caixin/Markit services purchasing managers’ index (PMI) rose to 51.9 in November, up from 51.2 in October and the highest reading since August.
A reading above 50 indicates growth, and any lower signals contraction on a monthly basis.
The index had plunged to 21-month low in September after hitting a three-month high in August.
New business also grew at the fastest pace in three months, with survey respondents reporting sales were supported by the addition of new clients and promotional activities. Companies slightly picked up the pace of new hiring as a result.
China’s leaders are counting on growth in services and consumption to rebalance their economic growth model from its heavy reliance on investment and exports.
The services sector accounts for over half of the economy, with rising wages giving Chinese consumers more spending power that is being felt at home and abroad.
Sales during China’s annual 24-hour shopping binge on Nov. 11, known as Singles’ Day, exceeded combined sales for Black Friday and Cyber Monday in the United States.
Alibaba, the Chinese e-commerce giant, reported its Singles’ Day sales hit $25.4 billion, smashing its own record from last year and cementing it as the world’s biggest shopping event.
Unlike the official data, the Caixin survey tends to focus more on small and mid-sized companies, which have tended to be under greater strain than their larger, state-supported peers.
The Caixin survey showed service providers in China were able to pass through higher input costs to clients, as companies raised their output charges at the quickest pace since July 2015.
A number of surveyed firms indicated that greater prices paid for raw materials, fuel and salaries had driven the latest upturn in overall costs.
A survey of manufacturers last week also suggested input costs remained high, fueled by China’s government’s tougher pollution measures in a battle against thick winter smog.
Mainly driven by the strong reading in the service sector, the headline Caixin China Composite PMI - which includes both manufacturing and services — rose to 51.6 in November, compared with 51.0 in October.
“The Caixin PMI readings in November showed the economy has maintained stability and there was no imminent risk of a significant decline in its growth rate. But we should be cautious because the economy may come under rising inflationary pressure at the start of next year due to continued price increases,” Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in a note with the report.
The world’s second-biggest economy has defied market expectations with growth of 6.9 percent in the first nine months of the year, supported by a construction boom and robust exports.
But China’s booming industrial sector is starting to show some signs of fatigue as higher borrowing costs, a crackdown on air pollution and a cooling housing market weigh on activity. (Reporting by Lusha Zhang and Elias Glenn; Editing by Kim Coghill) ))