China's services sector activity up as PMI survey hits five-month high
Markit/HSBC services PMI rises to highest in five months, showing growth in key sector
Growth in the mainland's services sector hit a five-month high last month, underpinned by new orders and business optimism, a private survey showed yesterday, adding to views that the world's second-largest economy has avoided a sharp slowdown.
The Markit/HSBC services purchasing managers' index climbed to 52.8 after seasonal adjustments, up from July's 51.3 and the highest since March. The reading was well above the 50 level that demarcates an acceleration in activity from a slowdown, although a sub-index for employment shrank.
The outcome was roughly in line with the mainland's official non-manufacturing PMI released on Tuesday, which showed the services sector grew steadily last month as domestic demand picked up. The official survey is weighted more towards bigger and state-owned companies.
Qu Hongbin, a HSBC economist, cited new business growth as the key driver of the index and expected growth momentum of the services sector to be sustained in future.
"A filter-through impact of VAT reform, combined with a rebound in manufacturing output, is expected to support service industry growth in the coming months," Qu said, using the acronym for value-added tax.
As recently as a month ago, investors had worried that the mainland economy was slipping into a deeper-than-expected downturn, especially after its money market was hit by an unprecedented cash crunch in June.
But policymakers have stepped in with a series of measures aimed at stabilising the economy, including quickening railway investment and public housing construction and introducing policies to help smaller companies with financing needs.
Earlier this week, both the official and Markit/HSBC PMI surveys of Chinese manufacturers showed factory activity accelerated last month.
The services industry is an increasingly important pillar of the mainland economy, especially as the government seeks to expand domestic consumption to drive growth. It accounted for about 45 per cent of the economy last year and is the country's biggest employer.
Firms in the survey reported that stronger demand and promotions lifted new orders, which rebounded to 53.2 last month.