China's service sector grew at the slowest pace in 20 months in April, providing further evidence that the recovery of the world's second-largest economy is fragile, a survey showed this morning.
The HSBC Business Activity Index, a gauge of operating conditions in private and export-oriented service companies, stood at 51.1 in April, down from March's 54.3 and the lowest since August 2011. A reading above 50 means expansion.
The new index showed only a marginal growth in China's service activity. Qu Hongbin, chief economist for China at HSBC, said the cooling of the service sector in April was likely a reflection of the knock-on effect of slower manufacturing growth, the impact of property tightening and the spreading of bird flu disease.
"Again, this starts to bite employment growth," Qu said. "All these are likely to add some risks to China's growth in the second quarter as there is still a bumpy road towards sustaining growth recovery."
The official Non-manufacturing Purchasing Managers' Index, which measures the vitality of mostly state-owned service enterprises, fell 1.1 points from a month earlier to 54.5 in April, the China Federation of Logistics and Purchasing said last Friday. It was also a sign of service sector slowdown after the manufacturing sector cooled last month.
China's gross domestic product expanded 7.7 percent in the first three months, slowing from 7.9 percent in the final quarter of 2012.
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