Wealth Club

China’s services sector showed signs of a rebound in November with an industry gauge recovering from a 13-month low in October despite lingering concerns over the economy.

The Caixin-Markit China services business activity index jumped to 53.8 in November from 50.8 a month earlier, beating analyst expectations and moving further from the 50 point mark separating expansion from contraction. The Caixin composite output index also rose in November to 51.9, bouncing back from a 28-month low of 50.5 in October. 

Still, the survey result for services follows an official gauge of factory output released last week which showed China’s manufacturing sector snapped a more than two-year growth streak in November. And the Caixin manufacturing purchasing managers’ index released on Monday, which focuses on smaller and private companies, also showed conditions remained broadly subdued.

Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, noted: 

The gauge for prices charged by service providers fell, while the one for input costs remained unchanged from October, which was not good for companies’ profit margins. The measure for business expectations, which reflects services providers’ confidence about operation prospects over the next 12 months, dropped. 

And in a research note on Wednesday, Goldman Sachs analysts commented: 

We expect the [Chinese] government to continue with the policy loosening stance despite the 90-day pause on the trade front, as the outlook of the trade talks remains highly uncertain and the economy and markets are on a relatively weak footing.