Growth in China’s services sector weakened slightly in September as new business cooled, a private survey showed on Wednesday, reinforcing signs of a slowdown in the world’s second-largest economy that could prompt more stimulus measures.
The services purchasing managers' index (PMI) compiled by HSBC/Markit pulled back to 53.5 in September from a 17-month high of 54.1 in August.
A reading above 50 in PMI surveys indicates an expansion in activity while one below that threshold points to a contraction.
A sub-index measuring new business fell to 53.2 in September from a 19-month high of 53.9 in August, but sub-indexes measuring employment and outstanding business both inched up, painting a mixed picture.
An official survey released last week showed that the services sector grew at its slowest pace in eight months in September after new orders shrank for the first time since the 2008 global financial crisis, exposing more weakness in the world’s second-largest economy.
The services sector made up 46.1 per cent of gross domestic product in 2013, surpassing the secondary sector - manufacturing and construction - for the first time, as the government aims to create more jobs and boost domestic consumption.
Last week, a pair of surveys showed China’s manufacturing sector held up in September but remained subdued in a sign that the economy is still struggling to recover its growth momentum -despite recent policy support.
Steps unveiled since April included reserve requirement cuts for selected banks and faster investment in railways and public housing. But much of their broader impact may have been offset by a cooling property market and tighter credit as banks grow more cautious about lending as the economy cools.
In a bid to avert a deeper slide in the housing market, China’s central bank and banking regulator relaxed lending rules for second-home buyers on September 30th by giving them a 30 per cent discount on mortgage rates and cutting their down payment levels to 30 per cent from 60-70 per cent.
The central bank said on Sunday it will use various monetary tools to maintain adequate liquidity and reasonable growth in credit and social financing.
Analysts expect more policy measures will be needed to help achieve the government’s growth target of around 7.5 per cent this year, although any dramatic stimulus looks unlikely as reform-minded top leaders have shown greater tolerance for slower growth.
The government is due to release September data on trade, bank lending, investment and factory output in the coming week or so, leading up to third-quarter GDP later this month.
The economy expanded by 7.5 per cent in the second quarter on-year.
Reuters
