China's August HSBC services PMI rebounds to 17-month high

Workers set up scaffolds at a construction site in Beijing, August 28, 2014. REUTERS/Jason Lee

BEIJING (Reuters) - China’s services sector expanded at the strongest pace in 17 months in August as new business rebounded after a sharp slowdown in July, a private survey showed on Wednesday.

The services purchasing managers’ index (PMI) compiled by HSBC/Markit jumped to 54.1 in August - the strongest reading since March 2013 - from a nine-year low of 50.0 in July.

A reading above 50 in PMI surveys indicates an expansion in activity while one below that threshold points to a contraction.

A sub-index measuring new business hit a 19-month high of 53.9 in August, but sub-indices measuring employment and outstanding business retreated, painting a mixed picture.

“The economy still faces downside risks to growth in the second half of the year from the property sector slowdown. We think policymakers should use further easing measures to help support the recovery,” said Qu Hongbin, chief China economist at HSBC.

Earlier on Wednesday, China’s official PMI services index for August was reported as 54.4, compared with July’s six-month low of 54.2.

Activity in China’s vast factory sector cooled in August as foreign and domestic demand slowed, two surveys showed on Monday, spurring new calls for more policy easing to prevent the economy from stumbling once more.

Reporting by Kevin Yao; Editing by Richard Borsuk