China’s Services Industries Expand at Faster Pace, Survey Shows
The purchasing managers’ index rose to 54.3 from 52 in August, HSBC Holdings Plc and Markit Economics said today. A reading above 50 indicates expansion.
Today’s report may offer investors some comfort that the nation’s slowdown is stabilizing after the economy's weakest expansion in three years in the second quarter. China may expand monetary and fiscal easing to support growth after a once-a-decade handover of power to a new generation of leaders begins next month.
The faster services industry expansion “is likely an indication of a gradual improvement of domestic economic conditions due to the earlier easing measures and the stronger consumption demand in the run-up to the Golden week holiday,” Qu Hongbin, Hong Kong-based chief China economist for HSBC, said in a statement today. A “meaningful turnaround” requires additional easing, he said.
China’s markets reopened today after a weeklong holiday. The benchmark Shanghai Composite Index (SHCOMP) of stocks fell 0.2 percent as of 10:41 a.m. local time. In Hong Kong, the Hang Seng Index declined 0.5 percent.
A government-backed measure of non-manufacturing industries expanded in September at the weakest pace since at least March 2011. That PMI, released Oct. 3 by the National Bureau of Statistics and China Federation of Logistics and Purchasing, fell to 53.7 from 56.3 in August.
The HSBC survey today showed new order volumes at services companies rose at the fastest pace in four months. Service sector firms also signaled a further increase in employment levels in September and an acceleration of input price inflation, the survey showed.
China’s growth cooled to a three-year low of 7.6 percent in the April-June period. The economy may expand 7.4 percent in the three months through September from a year earlier, based on the median estimate of 23 analysts surveyed by Bloomberg News from Sept. 11 to Sept. 18. The statistics bureau is due to release third-quarter gross domestic product data on Oct. 18.
Service industries account for about 43 percent of the economy compared with about 90 percent in the U.S. Under China’s current five-year plan, the government is seeking to raise the share of services in gross domestic product to 47 percent by 2015, the official Xinhua News Agency said in May.
To contact the editor responsible for this story: Paul Panckhurst at firstname.lastname@example.org