Private firms’ services grow at fastest pace

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Private firms’ services grow at fastest pace

(Shanghai Daily) 16:13, November 06, 2013

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BEIJING, Nov. 6 -- Service activity in private companies in China grew at the fastest pace so far this year in October, cementing the view that China’s economic recovery was on a stable path, a survey showed yesterday.

The HSBC China Services Business Activity Index, a gauge of operating conditions in private service companies, rose to 52.6 last month from September’s 52.4, according to HSBC Holdings Plc and consulting firm Markit.

A reading above 50 means expansion.

“Although growth remained modest and weak in the context of historical data, it was one of the strongest expansion in 2013 so far,” the report said.

Qu Hongbin, chief economist for China at HSBC, said China’s service sectors are improving broadly in the fourth quarter due to an increase in new business and employment.

“The service sectors are likely to find support from the ongoing recovery of manufacturing growth and signs of improving labor market conditions,” Qu said. “This should help cement China’s growth momentum in the coming months.”

The component indices indicated new orders rose at the fastest rate since March, boosting employment levels for the second consecutive month. Businesses also saw an improvement in the 12-month business outlook from September while input inflation accelerated to an eight-month high.

Likewise, business activity at state-owned service companies also climbed.

The non-manufacturing Purchasing Managers’ Index, geared toward state-owned enterprises, gained from 55.4 in September to 56.3 in October, the highest in 12 months, the National Bureau of Statistics and the China Federation of Logistics and Purchasing said on Sunday.

Cai Jin, the federation’s vice chairman, said the reading confirms the Chinese economy is on the path to stability as the construction and service sectors are becoming increasingly active and the non-manufacturing sector is absorbing more jobs.

Both indices cover non-manufacturing activities such as service, construction, software, aviation, railway transport and real estate.

Premier Li Keqiang has said China’s economy needs to grow at least 7.2 percent a year to ensure urban unemployment rate stays under 4 percent.