While China's service sector grew at a slower pace in December, an increase in the sector's new orders indicated further economic rebound, with more policy relief anticipated in the coming quarters, economists said Tuesday.
In the final months of 2019, the Caixin China General Services Business Activity Index stood at 52.5, a percentage point lower than that of November, suggesting that China's service sector was rising at a slower pace for the period.
According to a survey jointly published by media group Caixin and information provider IHS Markit, the New Order Index, a sub index of the Caixin service PMI index, continued to recover in December, reaching a three-month high and showing improved demand.
Surveyed service sector companies said a rise in new orders has been driven by rising customer numbers, product innovation, and marketing campaigns. Factors like uncertainties in China-U.S. trade negotiations, slower economic growth, and labor shortages this year could heavily dent business prospects.
Zhong Zhengsheng, CEBM Group director of macroeconomic analysis disclosed that while the expansion of the service and manufacturing sector in Mainland China slowed, overall economic activity was on a stabilizing track.
According to Zhong, business confidence remains significantly unchanged, which is an important factor that has hindered the country's economic recovery. China and the US signing the phase-one agreement would help win back investor confidence," he said.
Robin Xing, Morgan Stanley-China chief economist, said China's exports of goods and services could bounce back in a restocking process considering a potential recovery from the first quarter of global gross domestic product growth and gradually gain momentum in the coming months.
This year, China's private consumption could rise at a faster rate of 6.3 percent compared to 6 percent in 2019. Stronger consumption will help stabilize the labor market, release pent-up demand, and support a strong service business expansion, the economist stressed.
Xing said strengthened external demand and business confidence would also encourage a moderate recovery in investment growth in the manufacturing of fixed assets.
He said the country's GDP momentum could climb 6 percent in the next three months, after reaching a low of 5.9 percent in the fourth quarter last year. This, as external uncertainties have temporarily declined, which could stabilize the confidence of the private sector and lead to a slight recovery in exports, imports and private spending.
Meanwhile, China is set to post a set of key economic data including consumer price index, social finance, growth in money supply, and foreign direct investment.
