BEIJING (Reuters) - Growth in China’s services sector cooled to its slowest in almost a year in April as fears of slower economic growth dented business confidence, even as cost pressures eased, a private survey showed on Thursday.
The Caixin/Markit services purchasing managers’ index (PMI) fell to 51.5 from March’s 52.2, the fourth monthly decline in a row and suggesting the sector grew at its weakest pace since May 2016.
Caixin’s composite manufacturing and services PMI also pointed to a loss of growth momentum for the month, falling to 51.2, its lowest since June 2016, from 52.1 in March.
The findings echoed a similar trend of slowing growth seen in China’s official factory and services surveys on Sunday, though the Caixin surveys have a smaller sample size and largely focus on small- and medium-sized firms.
Analysts have predicted China’s economy would slowly lose steam in coming months after a strong first quarter, when it expanded by a faster-than-expected 6.9 percent.
Momentum is expected to cool as authorities step up their battle to cool the overheated property sector and as the central bank and other regulators tighten credit conditions to rein in rising financial risks.
“A turning point in growth appeared to have emerged at the beginning of the second quarter. Investors should be cautious about downward risks in the economy,” said Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group in a note accompanying the data.
Some business people also have told Reuters recently that they are worried about more limited access to credit and higher borrowing costs this year.
Services companies remained generally optimistic that business activity will increase over the next year, according to the Caixin survey. But the degree of positive sentiment slipped to a five-month low and job creation slowed to its lowest so far this year.
While the new business sub-component rebounded to 53.0 in April, the survey noted only 13 percent of companies surveyed reported higher new orders.
Cost pressures also eased somewhat, as input prices rose at a slower pace and firms continued to pass on some of the costs to customers.
China is counting on an increase in domestic consumption and new technologies to diversify its economic growth model from its traditional reliance on heavy industry and investment.
Reporting by Yawen Chen and Nicholas Heath; Editing by Kim Coghill