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BEIJING Aug 3 Growth in China's services sector
slipped to a six-month low in July as new orders rose at their
weakest rate in at least a year, data showed, taking some of the
shine off an industry that has been a bright spot in the Chinese
economy this year.
The official Purchasing Managers' Index (PMI) for the
non-manufacturing sector slowed to 54.2 in July from June's 55,
the National Bureau of Statistics said on Sunday. That is the
weakest reading since January.
A reading above 50 in PMI surveys indicates an expansion in
activity while one below the threshold points to a contraction.
The slight retreat in the services sector came at a time
when China's factories have started to recover, having earlier
this year been one of the drags on growth in the world's second
largest economy due to faltering demand at home and abroad.
In contrast, China's services companies have held up through
each slowdown since PMI records began in January 2007, with the
index staying above 50 in every month.
A mixed performance from other measures in Sunday's PMI
suggested that the services sector enjoyed an encouraging,
albeit slightly muddy, outlook.
Growth in new orders fell to their slackest rate in at least
a year in July. Yet at the same time, companies' business
expectations jumped to a level not seen in at least a year.
Inflation within the sector, be it production or final sales
prices, also quickened to a rate unseen in at least 12 months.
Cai Jin, vice president of China Federation of Logistics &
Purchasing, which publishes the services PMI in conjunction with
China's government, advised investors to not read too much into
"The volatility in the various sub-indices for the July
services PMI was not great," Cai said. "The market in general is
In contrast, he said weakness in China's property sector
persisted last month due to seasonal factors and muted demand.
"The market remains subdued. Prices are still in a
downtrend, and declines have increased."
China's once-heated housing market has slowed this year as
sales and prices turned south in their biggest pull-back in two
years, driven in part by a cooling economy, and after the
government tried for almost five years to calm the market.
But the extent and breadth of the downturn have surprised
analysts, with many worrying that it is the biggest threat to
the health of China's economy this year.
To limit the drag from a cooling housing sector on the
overall economy, nearly half of China's regional governments
have started relaxing curbs on home purchases this year,
reversing controls that were instituted from as early as 2009.
STRONGER FACTORY GROWTH
The services PMI followed two manufacturing PMIs released on
Friday that showed China's factory sector posting its strongest
growth in at least 1-1/2 years last month, suggesting that the
economy is gathering steam after a spate of stimulus measures.
Economic growth picked-up slightly in the second quarter,
accelerating to 7.5 percent from an 18-month low of 7.4 percent
between January and March.
Sunday's survey showed a sub-index for business expectations
rose to 63.9 last month from June's 62.9, while the measure for
new orders slipped to 50.3 from June's 50.9.
Production prices climbed to 58.2 from June's 57.1, while
final sales prices jumped to 52.4 from June's 51.2.
But with China's consumer inflation running well below the
government's annual 3.5 percent target, policymakers are
unlikely to be fazed by rising prices in the service sector.
In fact, Chinese authorities have steadily loosened monetary
policy since April to energise the economy, including relaxing
the reserve requirements for some banks. The construction of
railways and public housing projects have also been hastened to
The services sector, which accounted for 45 percent of
China's gross domestic product in 2012 and roughly half of all
jobs in the country, is expected to post steady growth in coming
years as the economy matures.
(Reporting by China Economics Team; Editing by Simon