China slowdown hits services sector

Activity in China's non-manufacturing sectors hit a near two-year low last month, official figures showed, adding to concerns over a slowdown in the world's second-largest economy. The official non-manufacturing Purchasing Managers' Index (PMI) Index released Wednesday fell from 56.3 in August to 53.7 in September -- its lowest point since November 2010. A reading above 50 indicates expansion, while anything below points to contraction. The previous low was 53.2, official statistic show. The figure comes after China said Monday that activity in the vital manufacturing sector came in at 49.8 in September, a slight increase from August but still showing shrinkage. China's economic growth slowed to 7.6 percent in the three months through June from the same period the year before, the weakest in three years. Various statistics for the third quarter, which ended Sunday, have been broadly disappointing, fostering expectations that growth has slowed further and that China could see a seventh consecutive quarter of moderating expansion. Gross domestic product figures for the three months through September are scheduled to be released in mid-October. Chinese authorities have expressed confidence they will achieve their 2012 growth target of 7.5 percent, though that would still mark a sharp slowdown from the 9.3 percent reached last year and 2010's 10.4 percent. They have taken steps this year to bolster the economy with two interest rate cuts in quick succession and by easing restrictions on how much money banks must keep on hand in an effort to boost lending and growth. The Chinese slowdown comes at a particularly sensitive time for China's ruling elite, which is preparing for a once-in-a-decade transition of power. The non-manufacturing index is based on monthly questionnaires sent to purchasing executives in 1,200 companies in the retail, aviation, real estate and construction industries.