China posts strong service activity in October

China’s services activity grew at a quicker rate in October, lifted by the country’s strong demand. However, worsening inflationary pressures pose risks to business confidence for the coming year.

The Caixin/Markit services Purchasing Managers’ Index (PMI) jumped to 53.8 in October from 53.4 in September. The latest figure was the strongest reading since July.

A sub-index for new business rose to 54.1 from 53.1 in September, boosted by strong export orders.

Input prices also surged for 16 consecutive months, touching their quickest rate since July in October. Prices rose to their highest level in three months as strong demand let businesses pass on a part of the expenses to consumers.

Caixin’s October composite PMI, which includes both manufacturing and services activity, surged  to 51.5 in October from 51.4 in September.

Business confidence dropped to its lowest level in four months due to persistent inflationary pressures and supply chain disruptions.