Weaker service activity ends rally
Print Edition
SERVICE activity at private firms in China weakened in September, ending a short-lived rebound a month earlier and reinforcing the economic slowdown in the world’s second-largest economy.
The HSBC China Services Business Activity Index, a gauge of operating conditions in private service companies, fell to 53.5 in September from a 17-month high of 54.1 in August, according to HSBC Holdings Plc and research firm Markit yesterday.
A reading above 50 means expansion.
The official non-manufacturing Purchasing Managers’ Index, a similar indicator compiled by the National Bureau of Statistics that weighs toward state-owned service companies, also fell to 54 in September from August’s 54.4.
Qu Hongbin, chief economist for China at HSBC, said the moderation was further proof of China’s slowing economy, although the sector was more resilient than manufacturing.
“Overall, the service sector held up in September despite the downward pressure seen in the manufacturing sector,” Qu said. “We think risks to growth in the near term are still on the downside, and they warrant accommodative monetary as well as fiscal policies.”
The HSBC PMI, which measures the private and export-oriented manufacturing sector, ended at 50.2, flat from August’s three-month low and down slightly from the earlier flash reading of 50.5.
Economists believed China’s economic recovery has halted due to weak activity indicators. The gross domestic product recovered in the first half of this year with the second quarter growth at 7.5 percent, up from 7.4 percent in the first three months.
But since then, the major activity indicators, including industrial production, fixed-asset investment and retail sales, all weakened in July and August, triggering fears whether this year’s economic growth target of 7.5 percent will be met.
This led to Goldman Sachs cutting its third and fourth-quarter growth projection to 7.1 percent from the previous 7.3 percent and 7.2 percent respectively, and the US bank predicts a 7.3 percent gain for the whole year.
Swiss bank UBS expects China’s GDP to expand 7.2 percent this year, below the growth target.
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