China’s services growth drops to 8-month low as orders drop
Doubts rise over the effectiveness of the latest measures to shore up the property market
The mainland's services sector grew at its slowest pace in eight months after new orders shrank for the first time since the 2008 global financial crisis, a survey showed yesterday, exposing more weakness in the economy.
The official non-manufacturing purchasing managers' index edged down to 54 last month from 54.4 in August, the National Bureau of Statistics said, but still well above the 50-point mark demarcating growth from a contraction.
In a sign that the mainland's cooling property market remained a key drag on the economy, the index showed the sector shrank last month, alongside other industries such as logistics and aviation.
A sluggish housing sector weighed on overall new orders, which fell to 49.5, a level not seen since December 2008 and down from 50 in August.
"The 'golden September' peak season in the property sector did not materialise. The market tracked a weak trend and activity was on the subdued side," said Wu Wei, an official at the China Federation of Logistics and Purchasing, which helps publish the index.
Yesterday's data raised questions about whether the mainland's move this week to cut mortgage rates and deposit levels for some homebuyers would be enough to revive its housing market and rejuvenate its economic momentum.
Indeed, the index showed the property, aviation, catering and environmental protection industries all took in fewer orders last month.
Overall slack caused employment in the sector to shrink for a third month as a sub-index for jobs inched down to 49.5 from 49.6 in August.
The mainland's slowdown risks were undermining the lift to Asia from a stronger economy in the United States, Chua Hak Bin, an analyst at Bank of America Merrill Lynch, wrote in a note.
Its cooling import demand was also hurting Asian commodity exporters such as Indonesia and Thailand, Chua said.
Financial markets on the mainland, shut for the National Day break, will resume trading on Wednesday.
After some initial declines, shares of mainland developers rose in Hong Kong yesterday on hopes that the new measures would revive sales.
Accounting for about 15 per cent of the country's gross domestic product, the housing market affects 40 other sectors from glass to cement. The government's move this week to relax lending standards for mortgages would be welcomed by investors who worry the economy is cooling too fast.
Analysts expect further measures to be announced in coming months to shore up the most vulnerable sectors of the economy if conditions do not stabilise.
