2024.01.0408:37:00UTC+00China Service Sector Gains Strength In December

China's service sector gained momentum at the end of the year amid new business posting the strongest rise in seven months, upbeat business sentiment and rising employment.

The Caixin services Purchasing Managers' Index, or PMI, rose to 52.9 in December from 51.5 in November, survey results from S&P Global showed on Thursday.

The reading was forecast to rise slightly to 51.6. The score signaled that output grew for the twelfth straight month and the pace of expansion was the fastest since July.

The overall expansion was largely driven by new business as it expanded at the fastest rate since May. Moreover, growth in foreign demand was the most pronounced since June.

Firms raised their workforce numbers for the first time in three months in response to rising demand. Backlogs of work were unchanged in December after rising in each of the last 16 months. Input price inflation picked up to a five-month high due to greater costs for raw materials and labor. By contrast, fees charged by services companies increased at the slowest pace in four months.

Companies remained upbeat that business activity will increase over the next 12 months in December. Nonetheless, the level of positive sentiment was below the series average.

The composite output index that combines manufacturing and services activity posted 52.6 in December, up from 51.6 in November. The score suggested that the rate of growth was the best recorded since May, with both manufacturers and service providers registering stronger expansions of output.

Caixin Insight Group senior economist Wang Zhe said efforts to increase employment should be strengthened to alleviate pressure on the job market, improve people's livelihoods, and ultimately foster long-term market confidence.