Growth in China’s services sector weakened further in October as new business cooled, a private survey showed on Wednesday, reinforcing signs of a gradual economic slowdown that could prod the government to unveil fresh stimulus measures. The services purchasing managers’ index (PMI) compiled by HSBC/Markit pulled back to 52.9 in October – the weakest reading since July – from 53.5 in September.
A reading above 50 in PMI surveys indicates an expansion in activity while one below that threshold points to a contraction. A sub-index measuring new business fell to 53.1 in October from 53.2 in October, but sub-index measuring employment and outstanding business both inched up, painting a mixed picture.
“Overall, the service sector grew steadily in October as the underlying business conditions continue to look better than in the manufacturing part of the economy,” said Qu Hongbin, chief China Economist at HSBC. “While this pattern will likely continue, we still expect further (policy) easing measures in the coming months to help offset the downward pressure on the economy.”