SERVICE activity in Chinese private companies cooled in February after rising at the fastest pace in four months in January, an HSBC survey showed yesterday.
The impact of the government's frugality campaign and the Spring Festival holiday were cited for the cool-down, and analysts said the performance was in line with the modest recovery taking place in the world's second-largest economy.
The HSBC Business Activity Index, which measures operating conditions in mainly private and export-oriented companies in the service industry, fell to 52.1 last month from January's 54 which was a four-month high.
But the index still indicated expansion as a reading above 50 means growth, and the survey said this suggested a modest rate of expansion in service activity. It said new business also rose modestly, but growth slowed from January's eight-month high.
Qu Hongbin, chief economist for China at HSBC Holdings Plc, said the bank expects "growth in the service sector to show a modest improvement in the coming months, thanks to healthy labor market conditions and the continued recovery of manufacturing growth."
The distortion of the Spring Festival holiday this year also sent the HSBC Purchasing Managers' Index, which measures vitality in the manufacturing sector, to 50.4 in February from January's 52.3, according to earlier reports.
The official non-manufacturing PMI, compiled by the China Federation of Logistics and Purchasing which is geared toward state-owned enterprises, stood at 54.5 last month, down from 56.2 in January.
All data pointed to slower expansion in China, whose economy grew 7.9 percent in last year's fourth quarter.
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