The US dollar is heading for the best week in three. The market sentiment is mixed as optimism about the global economic recovery was outshined by increasing tensions between the West and China.
Chinese services sector expands
In November, China's services sector managed to rally at its fastest tempo for five months. It became possible due to an uptick in new orders. That’s what follows from a private poll uncovered on Wednesday. However, the outlook for Chinese businesses over the next year has been struggling to improve for the third month.
In November, the Caixin/Markit services purchasing managers' index headed north to 53.8 in contrast from October’s reading of 50.8. It surpassed the 50.0 mark that separates descend from surge.
The rebound from October’s 13-month minimum drops a hint at pockets of strength in domestic demand in a sector accounting for over half of China's GDP as well as urban jobs.
It’s apparent that a sustained improvement in the vast services industry would assist to stabilize an economy, which has already wobbled against the backdrop of trade frictions with America, a manufacturing deceleration at home, to say nothing of a cooler real estate market.
In addition to this, the subindex for new business in the Chinese services sector tacked on to 52.5 in November versus October’s result of 50.1. However, the surge rate was mild and within recent ranges.
In November, companies also ramped up their staffing, although at a more gradual tempo than in October. The subindex for employment amounted to 50.7 in contrast with October’s reading of 51.1.
While employment in the sector has managed to expand for up to 27 months, excluding a minor sink in September in 2018, the surge has appeared to be shallower than the historical average.
Besides this, in November, operating expenses kept soaring, with a number of businesses citing higher raw material prices as well as fuel costs. As for the subindex for input prices, it froze at 53.3, intact from October.
Notwithstanding the upward pressure on input costs, Chinese businesses ramped up their prices just marginally, with some companies telling they had to stay competitive.
Rising yields, potential US tax hikes, and inflation fears worry investors. As a result, the market sentiment is risk-off. Stocks are falling, while the USD and the JPY are edging higher.
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