China Services of HSBC Recover PMI after Seeing a Low of One Year

HSBC Tower

HSBC Tower

According to a survey held on the 8th of October, the China’s services sector recovered in the month of September after being hit by nearly a one year low on the growth in the month of August. These results followed an official assessment that seemed a lot gloomy in the previous week.

The Report:

There was a rise in the index of the Purchasing managers of the HSBC services sector in the month of September thereby reaching to 54.3 from 52.0 that was the figure in the month of August. The China’s services sector recovered to the highest level since the month of May as the new business sub-index also rose to 54.0 that is the highest for a period of four months. These shining results however contradict with a non manufacturing PMI that was released officially on the 3rd of October. According to the PMI, the activity in the HSBC services sector slowed down in the month of September to a level that was its weakest since the month of November in 2010. The official report of the survey however focuses mainly on the bigger state-owned firms and hence the two reports do not seem to match with each other. Incidentally, it was the National Bureau of Statistics who published the reports of the official survey.

The Disparity in the Reports:

The survey report released on the 8th of October has quite a bit of disparity with the official PMI report as well as the reports from the HSBC services sector, which tend to indicate that China is moving forward to yet another phase of slowing growth for the seventh consecutive quarter. According to Hongbin Qu, the chief economist of HSBC for China, the situation sheds light on a gradual improvement of the domestic economic condition of the HSBC services sector. He has added that the stronger demand for consumption and easing measures, that were used previously during the holiday of the Golden Week, account for the fact that the China’s services sector recovered slowly.

The Weak Growth of Chinese Economy:

According to some analysts the year 2012 showcases a weak growth of Chinese economy since the year 1999 when the figures were at 7.7 percent only. According to a poll conducted by Reuters, there is a forecast of an annual weak growth of Chinese economy in the third quarter standing at 7.4 percent down from 7.6 percent in the second quarter. Analysts are forced to constantly push back their expectations of reviving from the weak growth of Chinese economy. Beijing is maintaining a firm hold on the real estate sector and is not at all ready for the launch of any sort of significant stimulus program. The PMI of the HSBC services sector reflected on a slight dip in the sub index that keeps a track on employment. But the Markit Economics noted that the employment grew at a pace that was the second fastest in the figures of the last ten months. This is mainly due to the rise in the new orders of course.

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Richard Meryn
Richard Meryn, Associate Editor Industry Leaders Magazine (www.industryleadersmagazine.com)

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