BEIJING (Reuters) – China’s services activity expanded at the slowest pace this year in September, a private-sector survey showed on Sunday, as demand remained weak despite a string of support measures.
The Caixin/S&P Global services purchasing managers’ index (PMI) dropped to 50.2 in September from 51.8 in August, the lowest reading since December. The 50-point mark separates expansion from contraction in activity.
The world’s second-biggest economy risks of missing a growth target of about 5% this year as officials wrestle with a worsening property slump, weak consumer spending, high debt and geopolitical tensions, leading major banks to downgrade forecasts for the year.
“Services supply and demand grew at a slower pace in September, as market conditions improved less than expected,” said Wang Zhe, senior economist at Caixin Insight Group.
Business confidence for the 12-month outlook reached a 10-month low in September.
Services companies also grappled with higher costs for staffing and fuel, the survey showed.
However, there were some positive developments with overseas orders expanding after contracting in August, partly driven by increased foreign visitors.
Caixin/S&P’s composite PMI, which includes both manufacturing and services activity, declined to 50.9 from 51.7 in August, marking the weakest since December.
“Both manufacturing and services PMIs tumbled despite remaining in expansionary territory, with the latter falling at a more pronounced rate,” said Wang.
Nomura in a research note also said services activity may have lost momentum, as the release of pent-up summer travel demand fades.
The economic slowdown is polarising government advisers over the best way forward, with advocates of structural reforms now emerging from the shadows in a challenge to others calling for more state spending to shore up faltering growth.
The central bank said on Wednesday it would step up policy adjustments and implement monetary policy in a “precise and forceful” manner to support an economy.
(Reporting by Liangping Gao and Ryan Woo; Editing by Sam Holmes)
