The China Caixin Services Dec PMI: 52.5 vs 53.5 prior
|The Caixin Services PMI for the month of December has just been released.
The Caixin Services PMI outcome
- China Caixin/IHS Markit December services PMI at 52.5 (vs 53.5 in November).
- Dec composite PMI (services and manufacturing) at 52.6 vs Nov's 53.2.
Beijing has been counting on a strong services sector to cushion a prolonged slowdown in manufacturing and investment and create jobs for workers laid-off in other areas. Economic growth has cooled to near 30-year lows amid sluggish demand at home and abroad. Caixin's composite manufacturing and services PMI, also released on Monday, slowed to 52.6 in December from 53.2 in November.
About
The Caixin Services PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private service sector companies. The panel has been carefully selected to accurately replicate the true structure of the services economy. The index has stayed above the 50-point margin that separates growth from contraction on a monthly basis since late 2005.
FX implications
The services sector accounts for more than half of the economy, although China's services sector expanded at a slower pace in December following a strong rebound in the previous month. The more downbeat reading suggests services companies remain cautious about the outlook for China's economy despite a flurry of stimulus measures, signs of improvement in the manufacturing sector and a long-awaited US-China trade deal. However, coupled with Friday's dismal US manufacturing PMIs, there is likely to be a soured mood on the street which will likely favour the safe haven's such as the yen, (AUD/JPY bearish), especially in light of the current geopolitics in the Middle East.
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