China's services industry picks up further in October


By Natalie Thomas

BEIJING, Nov 3 (Reuters) - Activity in China's servicessector expanded at the fastest pace in 13 months in October,offering further indications that the economy has stabilised,though activity in some important areas including new ordersslowed.

The official purchasing managers' index (PMI) for thenon-manufacturing sector rose to 56.3 in October fromSeptember's 55.4, the National Bureau of Statistics (NBS) saidon Sunday.

"The non-manufacturing sector should continue to develop ata stable rate over the next few months, though there still needsto be more market training and promotion to further release theservice sector's potential," said Cai Jin, vice-president of theChina Federation of Logistics and Purchasing, which helpedcompile the data.

The services industry is an increasingly important pillar inChina's economy as the government tries to move away frominvestment and exports as the main drivers of expansion.

The sector contributed to 45 percent of China's grossdomestic output in 2012, and it overtook manufacturing as thebiggest employer in 2011. It has weathered the global slowdownmuch better than the factory sector.

However, the PMI showed some areas of slowing activity,pointing to unevenness in the recovery.

The sub-index measuring new orders fell to 51.6 from a highof 53.4 the previous month, while the commercial services, thefood and drinks industry and real estate sub-indices were belowthe 50 point line separating expansion from contraction.


The government says its plans should lead to a firm economy,if not one that grows at the very high rates of previous years.

Speaking at a meeting of global business leaders onSaturday, President Xi Jinping said he was confident China wouldhave healthy growth through the government's reform drive.

"We are currently changing our way of development, adjustingour economic structure, accelerating our new style ofindustrialisation, promoting technology, urbanisation andagricultural modernisation," state media quoted Xi as saying.

Measures to boost the service sector and to open it up toforeign competition are expected to be unveiled at a meeting oftop communist party officials to be held from Nov. 9 to Nov 12.The meeting will lay out the leadership's economic reformagenda.

"We will put forward a comprehensive plan to deepen fullimplementation of reforms," state media cited Xi as saying ofthe upcoming meeting.

Analysts expect the restructuring of the economy to a moreconsumption-reliant model will take its toll on headline growthfigures. A recent Reuters poll sees growth moderating to 7.5percent in the final three months of 2013, down from 7.8 percentin the third quarter.

Sunday's release of the services sector index followed thebureau's manufacturing PMI on Friday, which showed factoryactivity expanded at its fastest rate in 18 months in October,with strong output the main driver of the expansion.

A separate PMI survey of the manufacturing industry byMarkit Economics and HSBC put manufacturing at a seven-monthhigh.

HSBC and Markit will release their services sector PMI onTuesday. That survey covers more smaller, private firms than theofficial PMI.

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