A gauge of China’s nonmanufacturing industries declined to an eight-month low in September, indicating rising pressure for the government to introduce new stimulus methods to counter a property downturn.
The non-manufacturing Purchasing Managers’ Index dropped to 54 from 54.4 in August, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on Oct 3. Readings above 50 indicate expansion.
The reading suggests a property slump is dragging down the services sector, which had been among the better performing areas of the economy this year.
After industrial production growth slowed to a five-year low in August and investment growth moderated, a slowing expansion of services adds a further hurdle to the government’s gross domestic product goal.
The PMI samples 1,200 non-manufacturing enterprises of various sizes nationwide. It tracks activity in sectors including services, construction, software, aviation, rail transportation and real estate.
In the sub-indices, new orders fell below 50 percent for the first time this year to 49.5 percent, down 0.5 percentage points; employment edged down by 0.1 percentage points to 49.5 percent; and business activity expectations dropped by 0.3 percentage points to 60.9 percent.
Cai Jin, deputy head of the federation, said the data show that China’s overall non-manufacturing business activity saw stable growth in September. Satisfactory performance in the construction sector and overall optimism suggest that investment will support stable growth in the near term, he said.
In the property sector last month, business activity and new order indices edged up slightly, but were still below 50 percent, Cai said.
Services accounted for 46.6 percent of gross domestic product in the first half of the year, 1.3 percentage points higher than the same period a year earlier, the statistics bureau said in July when it released second-quarter GDP data.
The report contrasted with the 51.1 manufacturing PMI released earlier this week.