BEIJING (Reuters) - 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.”
An official survey released earlier this week showed that the services sector grew at its slowest pace in nine months in October as the cooling property sector weighed on demand.
The services sector made up 46.1 percent of gross domestic product in 2013, surpassing the secondary sector - manufacturing and construction - for the first time, as the government aims to create more jobs and boost domestic consumption.
On Saturday, an official factory survey showed growth falling to a five-month low as firms fought slowing orders and rising borrowing costs.
Taken together, the surveys appear to indicate that China’s economy lost further momentum heading into the fourth quarter as a cooling property market weighed on activity and export demand softened, putting Beijing’s official 7.5 percent growth target for the year at even greater risk.
Annual economic growth slowed to 7.3 percent in the third quarter, the weakest pace since the global financial crisis, even as the government rolled out more stimulus measures.
A Reuters poll published last month forecast the economy could grow at an annual 7.3 percent in the fourth quarter, leaving the full-year pace at 7.4 percent - the weakest in 24 years.
Most analysts believe authorities will announce further modest support measures in coming months to support growth, but they are divided over whether policymakers will act more aggressively, such as by cutting interest rates, unless there is a risk of a sharper slowdown.
Reporting by Judy Hua and Kevin Yao; Editing by Kim Coghill