2019.07.0302:26:00UTC+00China's Private Sector Growth At 8-Month Low

China's private sector expanded at the slowest pace in eight months in June driven by slower growth in services activity and contraction in manufacturing, survey data from IHS Markit showed Wednesday.

The Caixin composite output index fell to 50.6 in June from 51.5 in May. However, a score above 50 indicates expansion. The reading signaled the weakest growth since last October.

The services Purchasing Managers' Index dropped more-than-expected to a 4-month low of 52.0 in June from 52.7 in the previous month. The expected reading was 52.6.

At composite level, new business grew at a softer pace in June. While service providers logged a slightly stronger growth in new work, factory orders declined amid trade tensions.

Disruptions to trade led to a reduction in new work from abroad at both manufacturers and services firms.

Composite data revealed a second straight fall in job numbers across China's private sector economy. The rate of manufacturing employment dropped slightly, while services firms reported a broadly unchanged level of employment.

Price pressures remained historically subdued in June, as the input price inflation rate was broadly similar to that seen in May. With input price inflation still soft, private sector companies afforded another marginal increase in selling charges, data showed.

Finally, expectations at Chinese firms regarding future activity fell to a record-low for the second consecutive month in June.

"The conflict between China and the U.S. impacted business confidence rather heavily," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group said.

"Although its impact on exports hasn't been fully reflected in the short-run, the longerterm situation doesn't look optimistic. Future government policies to stabilize economic growth are likely to focus on new types of infrastructure, consumption and high-quality manufacturing."