Summary
In September 2024, China’s services sector experienced a notable slowdown, with the Purchasing Managers’ Index (PMI) for services registering at 50.0, a slight decline from 50.3 in August. This reading, the lowest since last year, indicates stagnation in the sector and raises concerns about the overall economic recovery in the wake of ongoing challenges.
The contraction in the services sector comes alongside persistent weaknesses in manufacturing, where factory activity has contracted for five consecutive months. The composite PMI, which includes both manufacturing and services, reflects a fragile economic landscape, as the manufacturing PMI stood at 49.8, signaling continued contraction. Analysts suggest that this slowdown may compel Chinese policymakers to implement further stimulus measures to invigorate domestic demand and support economic growth, particularly as the country aims to meet its 5% growth target for 2024. Recent initiatives, including cuts to the reserve requirement ratio for banks and efforts to support local governments, underscore the urgency of addressing these economic challenges.
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