Pedestrians cross a road in the Bund in Shanghai. Photographer: Qilai Shen\/Bloomberg <\/p>\n
(Bloomberg) — China\u2019s services activity expanded in October even though growth was the weakest in three months, a private survey showed, as holiday spending and travel by households supported the industry during a deepening economic slowdown.<\/p>\n
The RatingDog China services purchasing managers\u2019 index slipped to 52.6 from 52.9 in September, according to a statement published Wednesday, extending a growth streak that started after Covid lockdowns in 2022. The median forecast of economists surveyed by Bloomberg was 52.5, with any reading above 50 indicating an expansion.<\/p>\n
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The services reading adds to a picture of an industry that\u2019s holding up relatively well despite sluggish consumer demand, even as weakness spreads across the world\u2019s second-biggest economy. Official PMIs last week showed the services activity picked up slightly to start the fourth quarter, thanks largely to long autumn holidays and the beginning of a shopping festival in October, while manufacturing and construction both slumped.<\/p>\n
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\u201cA solid improvement in domestic demand continued to drive the expansion of new orders,\u201d Yao Yu, founder of RatingDog, said in the statement. \u201cThe sustained contraction in employment and pressure on profit margins remain the main constraints facing the sector.\u201d<\/p>\n
China will likely have to lean more on the strength of domestic spending in the months ahead, even after a deal reached last week between US President Donald Trump and his Chinese counterpart, Xi Jinping, to defuse trade tensions.<\/p>\n
As export front-loading wanes and investment slows sharply, services consumption has emerged as a key area of focus for officials because it holds out the potential of unlocking additional demand \u2014 especially in areas like tourism and entertainment that don\u2019t fully meet household needs.<\/p>\n
In September, the government laid out measures to use its budget to develop the necessary infrastructure and guide banks to lend more to services providers along with consumers.<\/p>\n
And last month, policymakers pledged to increase expenditure on public services and work on promoting employment, according to a guiding document on China\u2019s next five-year plan starting in 2026.<\/p>\n
The program, however, also doubles down on industrial dominance and tech self-sufficiency, leading JPMorgan Chase & Co. economists to write that development of the services sector will likely remain secondary to manufacturing.<\/p>\n
What Bloomberg Economics Says…<\/p>\n
\u201cThe pro-growth policy shift since late last year has begun to move in the right direction, including cash handouts to aid child and elderly care. More will be needed. A lasting revival in consumer sentiment will require larger and longer-term commitments aligned with the 2026-2030 plan.\u201d<\/p>\n
\u2014 Eric Zhu. For full analysis, click here<\/p>\n
While the Chinese economy has entered the last quarter of the year with weaker momentum, strong performance earlier in the year means that a growth target of around 5% is likely within reach.<\/p>\n
Still, many analysts predict gross domestic product will be expanding only close to 4% in the coming quarters, in what would be some of the slowest growth seen since zero-Covid lockdowns roiled production in 2022.<\/p>\n
But Goldman Sachs Group Inc. is among global banks that are turning more upbeat on China\u2019s outlook, especially as trade tensions appear to be easing.<\/p>\n
\u201cIt\u2019s less likely we\u2019ll see tariff escalation both by the US and other countries, in part because China has demonstrated some leverage,\u201d Andrew Tilton, Goldman\u2019s chief economist for Asia Pacific, told Bloomberg Television on Wednesday.<\/p>\n
For China\u2019s leadership, consumption is more of \u201ca nice to have than a need to have,\u201d he said.<\/p>\n
\u201cThe five-year plan really emphasized continued focus on manufacturing, technology, exports,\u201d he said. \u201cSo policymakers clearly want that to remain part of the growth driver over the next several years.\u201d<\/p>\n
–With assistance from David Ingles and Yvonne Man.<\/p>\n
(Updates with Goldman comments in final three paragraphs.)<\/p>\n
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\u00a92025 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"Pedestrians cross a road in the Bund in Shanghai. Photographer: Qilai Shen\/Bloomberg (Bloomberg) — China\u2019s services activity expanded…\n","protected":false},"author":2,"featured_media":118718,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[902,138,607,219,111,139,69],"class_list":{"0":"post-118717","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-bloomberg","9":"tag-business","10":"tag-china","11":"tag-economy","12":"tag-new-zealand","13":"tag-newzealand","14":"tag-nz"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/118717","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=118717"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/118717\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/118718"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=118717"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=118717"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=118717"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}