China posted relatively solid economic growth of 6.8% in the third quarter, driven by a stronger services industry, although there were signs of weakness in real estate and construction as property cooling measures start to bite. China’s property sector grew 3.9% in the quarter from a year earlier, decelerating from 6.2% in the second quarter and the slowest pace in nearly two years, the National Bureau of Statistics (NBS) said.

Growth in construction activity slowed from 5.4% in the second quarter to 4%, the weakest expansion since the fourth quarter of 2000. Property and construction together account for 13.3% of the economy, with property alone directly impacting 40 other industries. Softening in those sectors appeared to be the main drag on the otherwise fairly resilient Chinese economy. Third-quarter growth eased only slightly to 6.8% from 6.9% in the previous quarter, as had been widely expected.

Analysts have long predicted a slowdown in the property sector and construction after city governments began rolling out measures from late last year to cool soaring home prices and deter speculators. Property sales dropped for the first time in more than 2½ years in September and housing starts slowed sharply.

China had posted forecast-beating growth in the first half of the year, led by a sharp turnaround in the long ailing industrial sector, which accounts for a third of the economy. A construction boom – fueled by the housing frenzy and government infrastructure spending – has spurred demand and prices of building materials, with the resulting return of factory gate inflation boosting earnings for China’s heavily indebted heavy industry. But industrial growth slowed to 6.3% in the third quarter, from 6.6% in the previous period and there is uncertainty about how “smokestack” industries will fare over the coming months as China implements drastic measures to reduce winter air pollution, the South China Morning Post reports.

Data also showed that total sales of consumer goods rose 10.4% year-on-year to CNY26.32 trillion in the first three quarters. The pace was unchanged compared with the same period of last year. The official Purchasing Managers’ Index (PMI) rose to 52.4, the highest this year. Growth of imports and exports both accelerated. China’s average per capita disposable income grew 9.1% year-on-year to CNY19,342 in the first three quarters, Fixed-asset investment expanded 7.5% in the first nine months, marking the slowest rate of growth since a 6.3% reading in December 1999.