China’s services sector created jobs at the fastest pace in seven months during September as new business picked up, even though the overall rate of growth was little changed from August, according to a private survey.
More signs of stability in China’s economy support the growing consensus that China’s central bank will hold off on further monetary easing such as interest rate cuts through at least the end of the year.
The Caixin/Markit services purchasing managers’ index (PMI) slipped fractionally to 52.0 in September on a seasonally adjusted basis from 52.1 in August, but remained well above the 50-mark that separates growth from contraction on a monthly basis.
While most measures of activity improved, companies’ business expectations were much lower than the previous month, when they hit a six-month high.
Services companies saw modest growth in new work in September with some firms attributing this to new clients and product developments.
Employment rose for the first time in three months. The pace of job creation, although moderate, was the fastest since February.
Caixin’s composite PMI covering both the manufacturing and services sectors also continued to show healthy expansion, with a reading of 51.4, also slightly lower than August.
Still, economists are calling for more structural reforms and fiscal support to encourage economic growth at a time when monetary policy on its own is increasingly viewed as less effective.
“Overall, the economy continued to grow in September, but the rate of expansion fell two months in a row,” said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group.
“Fiscal policy needs to continue to support the economy, because there is insufficient growth momentum on its own.”
China’s official services survey showed robust growth continued in September at a slightly faster pace than in August.
Manufacturing surveys also suggested the economy was slowly stabilizing, with Caixin/Markit’s showing activity expanded marginally as orders picked up, while an official factory reading stood at 50.4, identical to the previous month.
The surveys by Markit, which is a registered trade mark of IHS Markit Ltd., focus more on small and medium-sized firms.