BEIJING (Reuters) – China’s services activity expanded at a slower pace in January, with the Lunar New Year holidays worsening employment, but business sentiment improved, a private sector survey showed on Wednesday.
The Caixin/S&P Global services purchasing managers’ index (PMI), slipped to 51.0 from 52.2 in December, but remained above the 50-mark that separates expansion from contraction on a monthly basis.
That echoes the official PMI, which showed services activity weakened to 50.3 from 52.0.
The Caixin survey showed that new business growth eased to a four-month low, while employment fell to the weakest since April 2024.
The fall in January’s employment sub-index was partly due to the earlier-than-usual Lunar New Year holiday this year, as some restaurants shut down temporarily and sent workers back home for the more than one week-long celebrations.
The level of unfinished work fell for the first time in six months due to slower new business growth and better working efficiency.
Business sentiment rose from December, but some firms expressed concerns over rising competition and uncertainties pertaining to the outlook for international trade.
U.S. President Donald Trump on Saturday ordered 10% tariffs on goods from China. That prompted Beijing to swiftly respond on Tuesday with its own levies on some U.S. imports.
“The new duties will nearly double the effective tariff rate on Chinese imports (to the U.S.), but Chinese policymakers have ample scope to mitigate the damage to economic growth,” said Gavekal Dragonomics’s Thomas Gatley in a note on Monday.
Julian Evans-Pritchard, head of China economics at Capital Economics, said that there could be a silver lining for China, with Trump’s willingness to undermine U.S. alliances likely to leave China in a stronger geopolitical position.
The Caixin/S&P Global Composite PMI, which combines the manufacturing and services PMIs, fell to 51.1 in January from 51.4 the month prior.
The pace of growth softened to the lowest in four months, as quicker manufacturing output growth failed to counter a softening pace of growth in services activity.
China is struggling with a prolonged property crisis that has curbed investment and dented confidence though policymakers have pledged to prioritise domestic consumption in this year’s policies.
The country’s movie box office took in record revenue during the Lunar New Year holiday, as sequels to popular Chinese hits drew theatregoers. Some local governments issued cinema vouchers as part of a campaign to revive consumption.
(Reporting by Ellen Zhang and Ryan Woo; Editing by Jacqueline Wong)
