Caixin service PMI falls slightly to 53.1

BEIJING - China's service sector slowed in January, as a private survey showed Monday that an index for the sector fell slightly after reaching a 17-month high in December 2016.

The Caixin General Services Purchasing Managers' Index (PMI) edged down to 53.1 last month from 53.4 in December, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co Ltd.

A reading above 50 indicates expansion, while anything below 50 represents contraction.

The service sector accounted for more than half of China's economy last year and for the majority of growth, as rising incomes made catering, hotels and travel services more affordable for Chinese consumers.

New service business continued to rise rapidly in January, but the rate of expansion declined from that seen at the end of 2016, according to the survey, which is based on data compiled from monthly replies to questionnaires sent to purchasing executives in more than 400 companies.

The service sector data came after figures on Friday showed the Caixin China General Manufacturing Purchasing Managers' Index dropped to 51.0 last month, down from 51.9 in December, mainly on weakened growth in domestic demand.

The slower increases in both manufacturing and services activity at the beginning of the year led the Caixin China Composite Output Index to decrease to 52.2 in January from 53.5 in the previous month, marking the lowest increase since September 2016.

The Caixin manufacturing data was in line with the official PMI, which was released by the National Bureau of Statistics last week. The figure hit 51.3 in January, down marginally from 51.4 in December, on slower growth in production and demand in the run up to the Spring Festival holiday week, which started on Jan 27.

Analysts said that although the data pointed to a relatively good start for the economy in 2017, China faces a string of uncertainties and should be wary of downward pressures.

"The economy is unlikely to maintain the pace of expansion seen in the fourth quarter of last year given that the manufacturing sector's willingness to restock has declined," said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group.

The country's economy expanded by a stronger-than-expected 6.8 percent in the last quarter of 2016, picking up from a gain of 6.7 percent in the January-September period.