Services PMI dips further

Growth in new orders slows despite marginal rise in manufacturing activities in January

Services activity expansion slowed to a six-month low in January, with the services Purchasing Managers Index falling to 51.8 from 53.4 in December, HSBC Holdings Plc said on Wednesday.

New order growth at services providers slowed at the start of 2015, having eased further from November's two-and-a-half year peak, the bank said.

Although job creation accelerated in the services sector in January, manufacturing employment declined, with workforce numbers increasing marginally at the composite level.

Though the manufacturing PMI slightly improved to 49.7 in January, compared to 49.6 in December, it still remained at the contraction level for two consecutive months.

The official data showed a contraction in the manufacturing sector and a slower expansion in the services industry, indicating sluggish growth momentum during the first quarter.

A manager from Shunxuan Plastic Product Co Ltd in Dongguan, Guangdong province, said that the number of rural migrant workers in factories in the Chang'an town are less than half the number seen in 2014.

"Dwindling output at factories has meant less worker retention. This also means that there will be less people returning home for the holidays," he said.

An index that shows the current performance of small and medium-sized enterprises - the part that offers the most jobs in China - fell to 55.6 in January from 56.6 in December, according to data provided by Standard Chartered Bank. It points to weaker growth as sluggish demand continues to weigh on production.

According to the National Bureau of Statistics, the total number of rural migrant workers was 273.95 million in 2014, up 1.9 percent from a year earlier. The growth rate was 2.4 percent in 2013 and 3.9 percent in 2012.

Yang Junxiong, an official from the NBS, said that the growth rate of migrant workers has slowed down.

"As more rural migrant workers get permanent residence in cities, the surplus of rural workers will decrease, and labor costs will keep increasing."

A shortage of workers would be a major drag for the economy in the near future, said Yang.