China’s services sector rebounded last month after its growth hit a one-year low in August, according to a private sector survey yesterday that follows last week’s much more gloomy official assessment.
The HSBC services sector Purchasing Managers’ Index (PMI) rose to 54.3 points last month from 52.0 in August, rebounding to its highest level since May thanks to an uptick in the new business sub-index to 54.0 — also the highest level in four months.
The sunny results are in marked contrast to an official non-manufacturing PMI released on Wednesday, which showed activity last month slowing to the weakest level since November 2010.
The official survey, published by the National Bureau of Statistics, tends to reflect larger state-owned firms, and the two do not necessarily move in tandem.
Yesterday’s survey also contrasts with both the HSBC and the official PMI ones of China’s vast manufacturing sector, which indicate that China is headed for a seventh straight quarter of slowing growth.
“This 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,” said Qu Hongbin (屈宏斌), HSBC’s chief economist for China.
“While this helped to cushion the ongoing slowdown of manufacturing sectors, a meaningful turnaround in domestic demand requires additional easing efforts,” he said.
The week-long National Day holiday at the beginning of this month saw hundreds of millions of Chinese hit the roads and shopping malls, straining capacity at tourist destinations and crowding trains and airports. This year, the holiday coincided with the Mid-Autumn Festival, when families and business contacts treat each other to restaurant meals, mooncakes and gifts.
HSBC’s “prices charged” sub-index rose above 50 — the line that separates expansion from contraction — for the first time since March. The rise could reflect the holiday as well as reflecting an increase in inflation after a summer trough.
However, consumers may turn more cautious as the slowdown in the manufacturing sector feeds through to the urban services sector, as implied by the official non-manufacturing PMI results for last month, Standard Chartered said in a report.
The HSBC services PMI did reflect a slight reduction in the sub-index that tracks employment, although Markit Economics, which compiles the index, noted that employment grew at its second fastest pace in the past 10 months, thanks to the rise in new orders.
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