A Chinese services-industry index rose to the highest level this year, adding to evidence the nation’s economic rebound is sustaining momentum as leaders prepare to map out a blueprint for reform.
The non-manufacturing Purchasing Managers’ Index advanced to 56.3 last month, from 55.4 in September, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday in Beijing. A number more than 50 indicates an expansion.
Stronger consumption and employment suggested in yesterday’s report may bolster the government’s confidence that the third-quarter economic recovery is holding up after two manufacturing indexes last week rose more than estimated. Top Chinese Communist Party officials will meet this week to decide policy changes that may help China avoid a sharper slowdown in its longer term expansion as the investment and export-led growth model runs out of steam.
“Growth momentum will still be relatively robust” in the fourth quarter, said Lu Ting (陸挺), head of Greater China economics at Bank of America Corp in Hong Kong.
“The room for a further improvement in the non-manufacturing PMI is limited, so we should still avoid being too bullish,” he said, pointing to a decline in new orders and a contraction in export orders in yesterday’s report.
Lu estimates GDP will rise 7.7 percent in the fourth quarter from a year earlier, down from 7.8 percent in the July-September period. The pace could rebound to close to 8 percent in the first half of next year due partly to a low comparative base with this year, he said.
China’s GDP will increase 7.6 percent this year, according to the median estimate of 52 economists surveyed by Bloomberg last month. That is down from 7.7 percent last year and the same pace as 1999, which was the weakest expansion since 1990. Growth may slide to 7.4 percent next year, according to the median projection of 47 analysts.
Chinese President Xi Jinping (席近平) said on Saturday he is confident China will show “sustainable and healthy economic growth,” according to a report from Xinhua news agency.
The nation is transforming its mode of development and readjusting its economic structure through a new style of industrialization, urbanization, technology and agricultural modernization, he said.
Yesterday’s report follows two manufacturing PMIs released on Friday. An index from HSBC Holdings PLC and Markit Economics rose at the fastest pace since March. The federation’s gauge advanced to an 18-month high driven by faster output, while measures of new orders and export orders declined.
“Like the manufacturing PMI, activity in the non-manufacturing PMI appears to have run ahead of demand,” Hong Kong-based Citigroup Inc senior China economist Ding Shuang (丁爽) said, pointing to a 1.8 percentage point drop in the new order sub-index in yesterday’s report and a widening gap between a gauge of business activity and new orders.
“Unless demand catches up, this pace of activity expansion will not be sustainable,” he said.
A gauge of business expectations in the non-manufacturing survey rose to 60.5 from this year’s low of 60.1 in September, according to the CFLP statement.
“In the next few months, the non-manufacturing economy should continue to develop at a stable pace,” Cai Jin (蔡瑾), a vice chairman at the logistics federation, said in the statement. “We still need to strengthen market training and upgrading in order to further release the potential of the services industry.”