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China services industry growth picks up in Oct -HSBC PMI

Monday, 4 Nov 2013 | 8:45 PM ET

BEIJING, Nov 5 (Reuters) - Growth in China's services industry edged up in October, a private survey showed on Tuesday, offering further indications that the economy has stabilised in the run up to a key party reform meeting.

The Markit/HSBC services PMI rose to 52.6 from September's 52.4, well above the 50 line that separates expansion from contraction.

The survey showed new business growth was at a seven-month high and the business outlook for the next 12 months improved on the previous month, though it was still below trend. Employment levels also ticked up.

"Service sectors saw modest but broad-based improvement into 4Q," said HSBC economist Qu Hongbin, in a note accompanying the data.

"This should help cement China's growth momentum in the coming months."

The overall message tallied with that in China's official services PMI on Sunday, which showed a rise to 56.3, the fastest increase in 13 months.

But the two surveys differed in their reports for new orders, with the HSBC survey showing an increase to the highest level since March, while the official survey registered a decrease from the previous month.

The official survey is weighted towards bigger and state-owned firms and tends to come in higher than the HSBC survey, which focuses on smaller and private businesses.

Beijing hopes that the services industry, which has so far weathered the global slowdown much better than the factory sector, will become an increasingly important pillar in the economy, allowing China to move away from investment and exports as the main drivers of growth.

Ways to restructure the economy along those lines are expected to the major focus of the third plenary meeting of top party officials opening on Sunday.

Top-ranking Chinese politicians have stated that the meeting will yield "unprecedented" reforms, though how far the government is prepared to act on these intentions is likely to only become clear with time.

Services accounted for about 45 percent of the economy in 2012 and is the biggest employer in China.

Tuesday's survey followed a pair of PMIs that showed activity in China's manufacturing sector picked up in October.

The official manufacturing PMI increased to 51.4 from 51.1 in September, while the final Markit/HSBC PMI increased to 50.9 from September's 50.2.

(Reporting By Natalie Thomas; Editing by Kim Coghill)

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