China Economy

PMI data boosts hopes for mainland economic recovery

Purchasing managers' index shows pickup in activities in mainland services industry

PUBLISHED : Tuesday, 06 November, 2012, 12:00am
UPDATED : Monday, 30 May, 2016, 5:00pm

The mainland's services industry expanded last month, bolstering hopes for an economic recovery after last week's data indicated a pickup in manufacturing.

Economists widely expect Beijing to maintain its easing policies aimed at boosting demand and do not see any major policy shifts as the Communist Party leaders prepare to meet later this week for a power reshuffle.

The HSBC purchasing managers' index on services read 53.5, down from 54.3 in September, suggesting a solid, yet slightly decelerating, expansion. New businesses and employment rose moderately, the data showed.

A more upbeat outlook was projected in the non-manufacturing PMI issued at the weekend by the National Bureau of Statistics that rose to 55.5 from 53.7 in September, while a sub-index for construction surged to 60.2.

Construction activities have shown signs of picking up after the authorities quickened the approval of new infrastructure projects and bond offerings since the middle of this year to drive investment growth.

A reading above 50 indicates expansion, while that below 50 indicates contraction.

The HSBC index, which does not track activities in construction, covers services, including the transport, financial, communications and hospitality industries.

"The economy is gradually bottoming out as the filtering through of earlier easing policy is boosting domestic demand," HSBC chief China economist Qu Hongbin said.

Qu said he expected continued policy easing to sustain the recovery in the manufacturing sector and support growth in services and consumer spending.

Daiwa Capital Markets forecasts economic growth to reach 8.2 per cent in the fourth quarter from a 14-quarter low of 7.4 per cent in the third.

The HSBC survey said almost 31 per cent of respondents expected their businesses to pick up in a year while just over 7 per cent anticipated a decrease.

The level of positive sentiment was, however, "one of the weakest recorded in the seven-year series history so far", it said.