-Lu Zhengwei, an economist at Industrial Bank
Business activity in China's services sector, which accounts for 48% of the nation's economic output, grew at the slowest pace in six months, but managed to stay in the expansion territory in January. The HSBC China services PMI declined to 51.8 in January, down from 53.4 in the preceding month, suggesting the slowdown in the nation's factory sector is hitting services as well. A reading above the crucial 50 mark indicates expansion in the sector, while below means the sector shrinks. The weaker expansion in the services sector was driven by the slow growth of new orders in January. Moreover, companies also had lowered output prices. However, HSBC's data showed service providers continued to increase their staff numbers in January amid reports of ongoing planned company expansion. Meanwhile, an official gauge of China's services sector's health declined to 53.7 in the reported month down from 54.1 in December, according to the China Federation of Logistics and Purchasing.
China's economy recorded the 7.4% growth in 2014, the slowest pace in 24 years, driven by a property market slump, weak domestic demand and a slow global recovery. The government is widely anticipated to lower its economic growth target for this year to around 7%. Analysts also expect policy makers to cut interest rates again or lower the bank reserve requirement ratio in order to provide a support to the world's second biggest economy.
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