Chinese services activity slows down in August 2017, reaching its lowest level since May 2016. The PMI dropped from 54.5 points in July to 53.4 points in August. The service sector generates more than half of the Chinese economy, with rising wages giving consumers the opportunity to shop and travel more.
The authorities in Beijing rely on the growth in services and consumption to balance their economic model, which was previously mainly based on investment and exports.
In the first half of the year, GDP growth was above expectations of 6.9%, boosted by the long-standing boom in construction, strong retail sales and exports. However, some economists expect the pace of economic growth to slow down in the second half of the year due to higher funding costs, regulatory pressure on more risky lending, and the signals that the housing market is cooling down.
The PMI index for industry, which rose from 51.4 to 51.7 points, was also published Thursday. For over one year, the measure remains above 50 points, indicating that the sector is expanding. The economists expectations were for a value of 51.3 points.