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Services sector remains robust in September

2014-10-09 10:29 Xinhua Web Editor: Qin Dexing
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Firms optimistic about business outlook, HSBC PMI shows

China's services sector witnessed solid expansion in both business activity and new orders in September, despite the overall growth easing slightly from the 17-month high in August, a private survey showed on Wednesday.

The country's services Purchasing Managers' Index (PMI) moderated to 53.5 from the August reading of 54.1, yet the rate of growth remained stronger than the average recorded in 2014 so far, HSBC said in its latest report.

HSBC's monthly PMI readings mainly track business activities of smaller private firms compared with the official PMI.

September data showed that services firms in China remained optimistic toward the 12-month business outlook, with the level of positive sentiment strengthening to a six-month high, according to the report.

A solid expansion of new orders is the highlight of September's index, indicating that new product launches and improving market conditions helped boost new business.

"We think risks to growth in the near term are still on the downside, and warrant accommodative monetary as well as fiscal policies," Qu Hongbin, chief economist at HSBC, wrote in the report.

An official survey released on Friday showed that the services PMI slowed down in September by 0.4 percentage point to 54, an eight-month low, but still above the reading of 50 which separates expansion from contraction.

Manufacturing sector in September remained flat from August, sliding slightly from July, according to both official and HSBC surveys, which triggered market worries that the world's second-largest economy is wrestling to regain its growth momentum despite supportive policies.

China has taken a series of measures to boost investment and industrial production dragged down by a faltering property sector since January 2014, Liu Xiao, a senior analyst at Anbound Consulting Co, told the Global Times on Wednesday.

The country has taken initiatives since April to avert a deeper slide in the economy, including reserve requirement ratio cuts for selected banks and accelerated investment in railways and public housing programs.

The country's central bank said on Sunday it will keep monetary policy stable and use various monetary tools to maintain a moderate liquidity and reasonable growth in credit and social financing.

In the most recent effort to revive the cooling property market, the central bank eased lending rules for second-home buyers on September 30 by granting a 30 percent discount on mortgage rates and cutting the down payment requirement to 30 percent from a minimum 50 percent, as long as second-home buyers have repaid their previous home loans.

However, residential property sales in China are unlikely to immediately rebound despite the relaxation in the mortgage-lending rules, Standard & Poor's noted.

"We believe the property downturn will continue as buyers stay on the sidelines in anticipation of further price declines," Standard & Poor's credit analyst Fu Bei said in a research note sent to the Global Times on Wednesday.

China's economic slowdown has sparked market speculation that the country will adopt more accommodative policies to help achieve the government's growth target of about 7.5 percent this year.

But Liu said it seems unlikely the policymakers will launch further dramatic stimulus measures as reform-determined top leaders have shown greater tolerance for slower growth.

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