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Growth in China's services sector slowed sharply in April to its lowest point since August 2011, a private sector survey showed on Monday, in fresh evidence that economic revival will remain modest and may be facing wider risks.
The HSBC services Purchasing Managers' Index (PMI) fell to 51.1 in April from 54.3 in March, with new order expansion the slowest in 20 months and staffing levels in the service sector decreasing for the first time since January 2009.
"The cooling of service sector activity in April likely reflected the knock-on effect of slower manufacturing growth, the impact of property tightening measures and the spreading bird flu," said HSBC's China chief economist Qu Hongbin.
The employment sub-index decreased to 49.6 in April, the first net reduction in staff numbers since January 2009, although HSBC said job losses were marginal, partially caused by firms down-sizing and employee resignations.
Employment is a decisive factor shaping government thinking because it is crucial for social stability. The services sector accounted for 46% of China's gross domestic product in 2012, as big as the country's better-known manufacturing industry.
The government has set a 2013 growth target of 7.5%, a level Beijing deems sufficient for job creation while providing room to deliver reforms to the economy.
According to the Shanghai Daily a majority of university and college students set to graduate in the city next month are still looking for a job due to the grim employment situation.
Only 29% of 178,000 students who are to graduate this June have signed an offer, been admitted to postgraduate studies or decided to study abroad as of last month, according to the Shanghai Student Affairs Center.
The percentage was up 4% from March but down 3% year-on-year, even though the number of graduates is about the same as last year, the center said.
The center attributed the poor employment prospects for graduates mainly on the recovering economy, adding that the number of available positions declined from the past two years.
Some industries, especially manufacturing and foreign trade, have either suffered a downturn or are in a transition, making it especially difficult for students who majored in those fields.
In order to get a job, some students lowered their salary expectations while others accepted a position in a different industry.
"I would take a job as long as the salary is 3,000 yuan (US$488) a month," said a student majoring in printing art design at University of Shanghai for Science and Technology.
The senior said he has had more than 20 job interviews, but hasn't heard back from any of the companies.
In February, students were still expecting a starting salary of at least 4,000 yuan ($644), up 225 yuan ($36) from the average salary of 2012 graduates, according to China International Intellectech (Shanghai) Corp.
Only 20% of seniors at University of Shanghai for Science and Technology have signed up for a job or have been admitted to postgraduate studies, said Niu Xiangyu,director of the student employment guidance center at the school.
Niu said the demand for mechanical and manufacturing graduates was down 40% from last year.
Teachers from student employment centers at other universities and colleges said the accumulation of jobless graduates from previous years and the increasing number of overseas students who return to China for jobs have made it more difficult for this year's graduates to land a job.
"The overwhelming number of applicants have made competition for jobs harder and fiercer," said Tan Yuxu, director of the employment guidance center at Shanghai University of Finance and Economics.
"But the students are reluctant to lower their expectations," Tan said.
For example, some students refused to take jobs requiring different shifts even though the salary could be more than 4,000 yuan per month.
"Many students lost job opportunities like that simply because they don't want to endure hardships," Tan said.
Tan also said some students were spoiled by their parents and gave up easily after they failed to find an ideal job. They then relied on their parents and missed the best time to get a job, Tan added.
Tan suggested parents help their children lower expectations for their first job rather than compare them to their peers or help them become a NEET, defined as a young person "not in education, employment, or training."
Nationwide, nearly 7 million university students are about to graduate this summer, the largest number since 1949.