China’s factory and service sectors slide as stimulus calls grow By Reuters

BEIJING (Reuters) – China’s factory activity fell in September for a fifth straight month, while the services sector slowed sharply, suggesting even more stimulus is needed to meet Beijing’s 2024 growth target of just three months left in the year.

The National Bureau of Statistics (NBS) purchasing managers’ index (PMI) released on Monday rose to 49.8 in September from 49.1 in August, still below the 50 mark that separates growth from contraction, but beating a median forecast of 49.5 in a Reuters poll. . The reading was the highest in five months.

Along with a downbeat Caixin private sector survey also released on Monday, the data showed China’s expanding manufacturing industry remains a sore point for policymakers who acknowledged the economy faces “new problems” and called for more stimulus strong.

The central bank and the main financial regulator unveiled several sweeping measures late on Sunday, including asking banks to cut mortgage rates on existing home loans before October 31.

Last week, the authorities also launched the most aggressive stimulus package in the country since the COVID-19 pandemic.

SERVICE ACTIVITY COOLS

The September reading of the non-manufacturing PMI, which includes services and construction, fell to 50.0 from 50.3 in August, marking the lowest in 21 months.

The services PMI fell to 49.9, the first contraction since last December, although the construction PMI rose to 50.7 from 50.6 the previous month.

Reuters reported on Thursday that 1 trillion yuan ($142.56 billion) to be raised through special bonds will be used to increase subsidies for a consumer goods replacement program and to upgrade business equipment.

China also plans to raise another 1 trillion yuan through a separate special debt issue to help local governments deal with their debt problems, Reuters reported.

Officials said last week that the program has already boosted sales of cars, appliances and home decor products.

The Caixin services PMI showed activity in the sector slowed on Monday.

As a property slump hurts the broader economic recovery, top leaders at a Politburo meeting last week called for efforts to stem housing market slumps.

Megacities Shanghai and Shenzhen planned to lift key home-buying restrictions in the coming weeks, joining a long list of smaller cities that have done so, Reuters reported on Friday.

Analysts expect the stimulus and a new fiscal package of around 2 trillion yuan in size should be enough to generate growth in line with the “around 5%” target, but the country needs to address issues of weak demand and an increasingly hostile global trade. medium.

($1 = 7.0146)