China services gains bolster signs of rebound
China's services industries rebounded from the slowest expansion in at least 19 months, adding to manufacturing gains that indicate the world's second-biggest economy is recovering from a seven-quarter slowdown.
The purchasing managers' index rose to 55.5 in October from 53.7 the previous month, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing on November 3. The growth follows two reports last week that showed a pickup in manufacturing industries.
The improvements may ease pressure on China's leaders to roll out more stimulus as they start a once-a-decade power transfer this week. The nation's central bank said the economy is expected to maintain “steady and relatively rapid growth” as earlier government policies to support expansion take effect.
“Investors expecting a big stimulus package after the Party Congress will likely be disappointed, although the new leaders will probably introduce some new projects,” said Huang Yiping, chief economist for emerging Asia at Barclays Plc in Hong Kong. Indicators including employment and inflation “suggest that even today, growth is probably not significantly below its potential,” he said.
A separate services index will be released by HSBC Holdings Plc and Markit Economics in Beijing at 9:45 a.m. today.
China's economic expansion cooled to a three-year low of 7.4 per cent in the third quarter as Premier Wen Jiabao's campaign to curb consumer and property prices damped domestic demand and a sluggish global recovery capped the nation's exports.
Bank of America Corp. last week raised its estimate for fourth-quarter economic growth to 7.8 per cent from 7.5 per cent while Nomura Holdings Inc. projects a rebound to 8.4 per cent after the government cut interest rates, accelerated investment spending and project approvals and cut taxes.
The Shanghai Composite Index, the nation's benchmark stock gauge, had its strongest weekly rally in more than a month on speculation that economic growth is rebounding, rising 2.5 per cent in the five days ending Nov. 2. The MSCI Asia Pacific Index of stocks fell 0.3 per cent as of 9:26 a.m. in Tokyo.
China Cosco Holdings Co., the nation's biggest listed shipping company, reported a smaller loss in the third quarter compared with the same period a year earlier and China Shipping Container Lines Co., returned to profit as container rates increased.
“The impact of action to boost domestic demand has become more apparent and has bolstered market confidence,” Cai Jin, a vice chairman at the logistics federation, said in the Nov. 3 statement. The expansion in non-manufacturing industries in October “will help consolidate the foundation for steady growth,” he said.
In its quarterly monetary policy report released Nov. 2, the People's Bank of China said: “The preemptive fine-tuning of macro-economic policies and structural reform measures are gradually taking effect and the economy is expected to keep steady and relatively rapid growth.”
While priority will be given to ensuring stable growth, the government will stick to a prudent monetary policy and strengthen policy fine-tuning, it said.
Elsewhere in the Asia-Pacific region, Indonesia will probably report economic growth that held above 6 per cent last quarter, based on the median estimate of economists surveyed by Bloomberg News ahead of a report today.