China’s service sector growth benefitted from stronger business sentiment and higher input costs last month, according to a monthly Caixin survey, countering a steep drop in job creation.
The Caixin China General Services Business Activity Index rebounded to 53.1 in September from its 10-month low of 51.5 the month before. This means the gauge is well inside expansionary territory, demarcated by a reading of 50.
A breakdown of the data showed new business with service companies recovered well from its summer slump, with some survey participants pointing to new product offerings and larger client bases as the cause.
Input prices rose at the second-highest rate since mid-2012, likely squeezing profit margins since many firms surveyed chose not to increase retail prices in order to maintain competitiveness.
The employment sub-gauge fell under the neutral mark for the first time in over two years, meaning bosses in the sector were laying off employees faster than they were taking them on.