Growth in China's services sector weakened in the month of July due to moderate activities witnessed across the service sector, Reuters reported, citing a private survey conducted by Caixin.       

The Caixin services purchasing managers' index (PMI) declined to 51.7 points in July on a seasonally adjusted basis, from an 11-month high of 52.7 recorded in June. While the PMI was well above the crucial 50 points, a closer look into the index revealed that growth momentum is losing its pace.

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"All of the index categories showed signs of deterioration, with employment falling back into contraction territory after three consecutive months of growth," said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group.

Survey respondents claimed the pick up in cost-cutting activities and failure to replace voluntary leavers as the main reason for the decline in employment numbers.

Caixin also released a composite PMI covering both the manufacturing and services sectors, which rose to 51.9 in the month of July. This is the highest level that the country's composite PMI has reached since 2014. The number reflects huge improvement in the manufacturing sector.      

However, a breakdown of the composite PMI showed that construction services growth and property services sector have weakened.      

The Chinese government has been counting on services sector for economic revival as the country's manufacturing and industrial sector continues to reel under pressure. A prolonged downturn in the manufacturing sector coupled with falling exports pulled down China's growth rate to a 25-year low earlier this year.

TagsChinese Service Sector, Chinese Economy, china, Caixin PMI