- Qu Hongbin, HSBC economist
Services sector in the world's second biggest economy, China, rose at its fastest pace this year in April as a sizzling stock market rally helped bolster consumer confidence and spending. The services PMI climbed to a four-month high of 52.9 in April, compared with 52.3 in March, firmly above the 50-point level that separates expansion from a contraction in activity on a monthly basis. Some companies attributed part of the increase in new business to the sturdy stock market, which reached a seven-year peak in April, suggesting that the wealth effect had seeped into parts of the nation's economy. However, the HSBC/Markit China's services PMI data showed final prices of services dropped to the lowest level in 15 months in April as some companies were forced to cut prices to boost sales. Meanwhile, new orders and employment grew modestly in the sector. China's services sector, a key source of employment, has been growing at a faster pace than the country's manufacturing sector. Yet, analysts expected that service providers may face difficulties this year due to a property downturn and slower economic growth.
China's official nonmanufacturing PMI, a competing a gauge, fell to 53.4 in April from 53.7 in March, the China Federation of Logistics and Purchasing said last week.
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