-Annabel Fiddes, Economist at Markit
Business activity in China's services sector rose last month after declining to the lowest level in six months in January, suggesting a modest recovery outside the manufacturing sector. HSBC's China's services PMI climbed to 52.0 in February, up from 51.8 in the previous month. A sub-index for new orders increased to 52.2 in February up from 51.2 in January, while the sub-index measuring new business also rose. The services sectors accounted for 48% of China's $10.2 trillion economy last year. Activity in the job-creating sector has been growing faster than in the country's manufacturing sector, but service providers may struggle this year due to property slump and slower economic growth. China's economy slowed to 7.4% last year, the weakest growth pace in 24 years, from 7.7% in 2013. A further slowdown to 7% is predicted this year, which may trigger further stimulus measures, as a cooling property market, excess manufacturing capacity and falling investment affect overall activity. Chinese officials will announce a 2015 growth target at the opening of the annual session of China's legislature this week.
Meanwhile, business activity reached the highest level in five months with the HSBC China Composite PMI, which covers both manufacturing and services sectors, ticking up to 51.8 in February, compared with January's recent low of 51.0.
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