China services sector growth weakens slightly in September: HSBC PMI

Wed Oct 8, 2014 4:55am EDT
 
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By Kevin Yao

BEIJING (Reuters) - 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.

"Overall, the services sector held up in September, despite the downward pressure seen in the manufacturing sector. We think risks to growth in the near term are still on the downside, and warrant accommodative monetary as well as fiscal policies," said Qu Hongbin, chief China economist at HSBC.

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 percent 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.

President Xi Jinping's sustained crackdown on corruption has taken a toll on sales of luxury goods and expensive dining.   Continued...

 
A restaurant promoter wearing a traditional Chinese costume waits for customers, in Beijing May 8, 2014. REUTERS/Kim Kyung-Hoon