Oct. 3 (Bloomberg) -- China’s non-manufacturing industries expanded at the weakest pace since at least March 2011 as officials struggle to reverse a slowdown in the world’s second-biggest economy.
The purchasing managers’ index fell to 53.7 in September from 56.3 in August, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing today. Readings above 50 indicate expansion.
China’s ruling Communist Party is trying to retain public support by sustaining growth while avoiding a resurgence in home prices as it prepares for a once-a-decade handover of power that begins at a congress in Beijing starting Nov. 8. Similar measures for manufacturing showed contractions last month, underscoring pressure on the government to roll out extra support for the economy as export demand falters.
“The global slump in demand, especially from Europe, will remain a serious drag on growth in the near term,” Changyong Rhee, chief economist for the Asian Development Bank, said in a statement today. The ADB cut its forecast for China's economic growth this year to 7.7 percent from 8.2 percent.
China’s markets are closed this week for a holiday. In Hong Kong, the Hang Seng Index rose 0.7 percent as of 9:45 a.m. local time in the first trading day since a U.S manufacturing report was better than forecast.
Today’s PMI number was lower than any previous reading in data compiled by Bloomberg News and starting in March 2011. Lu Ting, a Hong Kong-based economist with Bank of America Corp., previously described the gauge as low-quality, subject to seasonal distortions and with much less “predictive power” than equivalent surveys for manufacturing.
The government has accelerated approvals for investment projects, lowered interest rates and boosted tax support for exporters in response to the slowdown. At the same time, authorities have refrained from easing monetary policy since rate cuts in June and July and a May reduction in banks’ reserve requirements.
Economic 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.
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