No spark in services data deepens China gloom
Softening growth momentum in a sector of the economy that has been driving job creation prompts investors to sell down stock holdings
The mainland's services sector is adding to investors' gloom over prospects for the economy, as two surveys yesterday signalled that a faltering first-half recovery from the slowest full year of growth since 1999 risks getting worse in the months ahead.
Purchasing managers' index readings of the services industry from both the National Bureau of Statistics and HSBC suggest domestic demand is drooping at the same time as external appetite for mainland exports is shrinking, putting downward pressure on the economy.
Yao Wei, an economist at Societe Generale China, said: "Second-quarter economic growth has definitely worsened, with general demand failing to show any marked improvement."
Stock markets displayed their dismay over the growth outlook, with mainland shares listed in Hong Kong dragging down the Hang Seng Index by 2.48 per cent yesterday.
Banks and property developers, the segments most exposed to the government's clampdown on soaring off-balance sheet lending and speculation in property markets, were among the day's biggest fallers. The H-share index dropped 3.3 per to close at 8,900.25 points, its lowest since June 25, when it hit a 20-month trough.
New orders climbed last month at their slowest pace in 55 months, according to the HSBC China services PMI, with business confidence falling to the lowest since 2005, when the survey started.