The services sector has been more resilient than the manufacturing sector and is creating more jobs, which partly explains why the government has so far refrained from more aggressive policy easing in supporting the slowing economy.
The official non-manufacturing Purchasing Managers’ Index (PMI) fell to 53.8 in October from September’s 54.0, which was the weakest reading since January, the National Bureau of Statistics said.
But it was still comfortably above the 50-point mark that separates growth from contraction on a monthly basis.
The sub-index of new orders inched up to 51.0 in October from September’s 49.5, which was the lowest since December 2008.
“Sub-indices for sectors such as railway transport and real estate remained below the 50 point and market demand weakened,” the bureau said.
The sub-index measuring employment fell to 48.9 in October – the fourth straight month when it was below 50, and was down from September’s 49.5.
An official survey published on Saturday showed China’s factory activity unexpectedly fell to a five-month low in October as firms fought slowing orders and rising costs in the cooling economy, reinforcing views that the country’s growth outlook is hazy at best.
China’s annual economic growth slowed to 7.3 percent in the third quarter, the weakest pace since the global financial crisis, even as the government rolled out more stimulus measures to avert a sharper slowdown.
The two surveys suggest a further loss of economic momentum heading into the fourth quarter. Analysts had already expected full-year economic growth to miss the government’s full-year target of around 7.5 percent, even after it rolled out a series of support measures.
Still, top policymakers have issued a steady stream of reassurances about the economy in recent weeks, citing among other things a strong services sector and a still resilient labor market.
Policy measures so far this year include accelerated construction of railway and public housing projects, cuts in reserve requirements (RRR) for some banks and loosening of restrictions on property purchases to support the cooling housing market.
The services sector made up 46.1 percent of gross domestic product in 2013, surpassing the secondary sector – manufacturing and construction – for the first time, as the government aims to create more jobs and boost domestic consumption.-REUTERS
