China’s services sector last month grew at its weakest pace since at least March 2011, raising fears over an economic slowdown that officials are struggling to manage.
The purchasing managers’ index fell to 53.7 from 56.3 in August, according to the latest survey from China’s National Bureau of Statistics, where any reading over 50 indicates expansion.
Wednesday’s PMI number was the lowest since Bloomberg began collecting the data in March 2011.
The drop follows similar surveys for manufacturing last month which showed continued contraction as new export orders fell sharply, putting pressure on the government to provide extra support for the economy.
The latest data almost certainly signal a seventh straight quarter of slowing economic growth, as China’s ruling party tries to sustain public support as it prepares for a once-a-decade handover of power next month.
“The global slump in demand, especially from Europe, will remain a serious drag on growth in the near term,” said Changyong Rhee, chief economist at the Asian Development Bank.
The ADB cut its growth forecast for China this year from 8.5pc to 7.7pc.Mr Rhee added: “The government has the means to cushion the economy from global turmoil, however.
Its strong fiscal position, receding inflation and expansionary policy measures should ensure a soft economic landing, but it needs to expedite its effort to diversify the source of growth and strengthen structural reforms for inclusive growth.”
The government has lowered interest rates, accelerated approvals for investment projects and boosted tax support for exporters in response to the slowdown.
In May it reduced banks’ reserve requirements.
Dong Tao of Credit Suisse described the Chinese economy as a “car stuck in the snow” earlier this week. He said a further easing in monetary policy would not get the Chinese economy moving forward.
telegraph.co.uk
The purchasing managers’ index fell to 53.7 from 56.3 in August, according to the latest survey from China’s National Bureau of Statistics, where any reading over 50 indicates expansion.
Wednesday’s PMI number was the lowest since Bloomberg began collecting the data in March 2011.
The drop follows similar surveys for manufacturing last month which showed continued contraction as new export orders fell sharply, putting pressure on the government to provide extra support for the economy.
The latest data almost certainly signal a seventh straight quarter of slowing economic growth, as China’s ruling party tries to sustain public support as it prepares for a once-a-decade handover of power next month.
“The global slump in demand, especially from Europe, will remain a serious drag on growth in the near term,” said Changyong Rhee, chief economist at the Asian Development Bank.
The ADB cut its growth forecast for China this year from 8.5pc to 7.7pc.Mr Rhee added: “The government has the means to cushion the economy from global turmoil, however.
Its strong fiscal position, receding inflation and expansionary policy measures should ensure a soft economic landing, but it needs to expedite its effort to diversify the source of growth and strengthen structural reforms for inclusive growth.”
The government has lowered interest rates, accelerated approvals for investment projects and boosted tax support for exporters in response to the slowdown.
In May it reduced banks’ reserve requirements.
Dong Tao of Credit Suisse described the Chinese economy as a “car stuck in the snow” earlier this week. He said a further easing in monetary policy would not get the Chinese economy moving forward.
telegraph.co.uk
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