China’s PMI rises to 55% in Oct

REUTERS

BEIJING CHINA’S services sector rebounded in October from a two-year low in September on stronger activity in the construction and retail sectors, an official survey showed on Saturday, adding to signs of a modest economic recovery.

The official purchasing managers’ index (PMI) for the sector rose to 55.5 in October from 53.7 in September, according to the latest survey from the National Bureau of Statistics.

The sub-index for the construction services sector rose to 60.2 from 58 in September while the sub-indices for activities in the sectors of retailers, hotels, environmental protection and public utilities all stayed above 60, the bureau said.

But the new orders subindex for the services sector as a whole eased to 51.6 in October from 51.8 in September, it said without elaborating.

The Services PMI reading in September was the lowest in nearly two years, although the sector remains above the 50-point line that divides expansion from contraction.

The central bank has been steadily easing policy to boost credit while the National Development and Reform Commission (NDRC), the top economic planning agency, has been fast-tracking infrastructure projects to boost investment.

China’s central bank said in a policy report published on Friday that it will prioritise supporting the economy above other needs, affirming expectations that the recovery in the Chinese growth engine is feeble at best.

The property sector has showed signs of warming up in recent months due to policy easing and support from local governments.

The services sector index follows two manufacturing PMI surveys that showed the economy may be regaining some steam in October following a series of policy steps.

“Overall, we can say that recent government stimulus steps have started to gain some traction,” said Hua Zhongwei, senior economist at Huachuang Securities in Beijing.

“This is a positive sign which shows that increased investment is boosting demand for related services.” China annual GDP growth is expected to accelerate to 7.6 percent in the next quarter from 7.4 percent in the third quarter, snapping a seventh straight quarter of slower expansion and paving the way for beating the full-year target of 7.5 percent.