China’s non-manufacturing industries grew at a slower pace in October as weakness in investment in real estate and railways offset strength in consumer demand, a survey indicated.
A purchasing managers’ index fell to 57.7 from 59.3 in September, the China Federation of Logistics and Purchasing said on its website on Thursday. The gauge, released with the statistics bureau, includes construction.
On Thursday's data added to signs of moderating inflation that may allow officials to ease monetary or fiscal policy, with the federation reporting "notable" declines in price indicators. Europe's debt crisis and a U.S. recovery that Federal Reserve Chairman Ben S. Bernanke calls "frustratingly slow" are capping demand for shipments from the world's biggest exporting nation, adding to economic headwinds.
"When the economy is cooling, service industries won't be able to escape the impact, especially manufacturing-related services such as logistics and transport," Lu Ting, a Hong Kong-based economist at Bank of America Corp., said before on Thursday's release. "But government help for smaller businesses and increased consumer spending will support growth in services."
The Shanghai Composite Index rose 0.8 percent as of 10:46 a.m. local time on speculation that the government will do more to support the economy.
Credit Agricole CIB said that the index adds to signs of a "further deceleration" in growth, while cautioning the data is "volatile."
CONTRACTION IN REAL ESTATE
"Consumer demand remains robust," Cai Jin, vice chairman of the logistics federation, said in on Thursday's statement.
"Declines in railway investment and tightened funding has led to the suspension of many railway projects, hurting demand in the construction market," the federation said, citing a survey of companies. "Real-estate development investment will continue to slow in the fourth quarter because support from public housing investment may weaken after 98 percent of such housing has already started construction."
A new order index for construction industries fell to 50.5, close to the diving line between expansion and contraction. A gauge of real-estate activity fell to 48.7.
China Vanke Co., the nation's biggest listed property company, has reported sliding sales, along with China Overseas Land & Investment Ltd. (688)
HSBC SURVEY
A service-industry index released on Thursday by HSBC Holdings Plc and Markit Economics painted a different picture. The measure showed the fastest expansion in four months, with the bank's Hong Kong-based economist Qu Hongbin saying the data underscored "the strength of the Chinese economy."
Service businesses are likely to get a boost in the coming year from a plan announced by the State Council to ease the burden from value-added taxes, Qu said.
While Premier Wen Jiabao said on Oct. 25 that the government will fine-tune economic policies as needed, a central bank offical told reporters in Cannes, France, yesterday that monetary policy "will not change." Zhang Tao, the director general of the international department, was speaking before a Group of 20 summit.
Chinese manufacturing indexes released Nov. 1 gave conflicting readings. A gauge from the CFLP and the government fell to the lowest level since February 2009, while a measure released by HSBC and Markit rose. The surveys have different sample sizes and methodologies.
