Service index indicates China on trackA Chinese service industry index rose for a second month to the highest level this year, adding to evidence the nation’s economic rebound is sustaining momentum as leaders prepare to map out a blueprint for reform.
The non-manufacturing Purchasing Managers’ Index advanced to 56.3 in October from 55.4 in September, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing.
A number more than 50 indicates expansion.
Service industries accounted for about 45 percent of gross domestic product last year, according to statistics bureau data, up from 41 percent in 2003. The government is seeking to increase the share to 47 percent by 2015, according to its five-year plan. In the United States, services are about 90 percent of the economy.
The stronger consumption and employment suggested in today’s report may bolster the government’s confidence that the third-quarter economic recovery is holding up after two manufacturing indexes last week rose more than estimated.
Top Communist Party officials will meet this week to decide policy changes that will help China avoid a sharper slowdown in its longer term expansion as the investment and export-led growth model runs out of steam.
“Growth momentum will still be relatively robust” in the fourth quarter, said Lu Ting, head of Greater China economics at Bank of America in Hong Kong. “The room for further improvement in non-manufacturing PMI is limited, so we should still avoid being too bullish,” he said, citing a decline in new orders and a contraction in export orders in yesterday’s report.
Lu estimates gross domestic product will rise 7.7 percent in the fourth quarter from a year earlier, down from 7.8 percent in the July-September period.