OREANDA-NEWS. January 10, 2014. Business activity in China's services sector fell significantly in December to its lowest level since August of 2011, according to results of a private sector survey released.
 
The HSBC/Markit China services purchasing managers' index (PMI) posted at 50.9 in December, notably down from 52.5 in November.
 
A PMI reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.
 
Chinese service providers reported increased business activity in December. That said, the rate of growth eased to a marginal pace that was the weakest since August 2011, said data company Markit in a statement.
 
Service providers also signaled a modest rate of new order growth in December, but it was the weakest in six months.
 
Service providers, however, saw payroll numbers increase for the fourth month in a row. Moreover, it was the strongest expansion of workforce numbers in the service sector since June, according to Markit.
 
Latest data signaled that Chinese service providers were optimistic toward the 12-month business outlook in December, with 26 percent of panelists expecting output to increase.
 
"However, the degree of positive sentiment remained historically weak, despite improving from the previous month," the statement said.
 
Qu Hongbin, HSBC's chief China economist, said China's labor market conditions improved for the fourth month in a row despite the moderation of the headline China Services PMI index, which reflected slower new business growth.
 
"We expect the steady expansion of manufacturing sectors to lend support to service sector growth," he added.
 
Moreover, the implementation of reforms such as lowering the entry barriers for private firms in service sectors and the expanded value-added tax (VAT) reforms should help to revitalize service sectors in 2014, according to Qu.
 
Earlier on Friday, the National Bureau of Statistics and the China Federation of Logistics and Purchasing released the official PMI for the non-manufacturing sector in December, which fell to a four-month low at 54.6.