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China's Non-Manufacturing Sector Expands Slower
Jun 4,2012 08:46CST
data analysis
China's non-manufacturing sector grew at a slightly slower rate in May as the world's second largest economy showed signs of further moderation.

June 4 -- China's non-manufacturing sector grew at a slightly slower rate in May as the world's second largest economy showed signs of further moderation.

The Purchasing Managers Index (PMI) of the country's non-manufacturing sector, a key economic indicator, dropped 0.9 percentage points to 55.2 percent in May, according to data released by the China Federation of Logistics and Purchasing (CFLP) on Sunday.

It was the second consecutive month of decline, after the index fell 1.9 percentage points from March to 56.1 percent in April.

A PMI reading above 50 percent indicates expansion from the previous month, while readings below this mark indicate a contraction.

"The non-manufacturing economy has maintained steady and strong growth as the PMI in May remained on a high level despite a small retreat," said CFLP Vice Chairman Cai Jin.

The figure followed Friday's release of the PMI for the country's manufacturing sector, which ended five consecutive months of growth and dipped to 50.4 percent in May from 53.3 percent in April.

Analysts expect China's economy to downshift further in the second quarter as Europe's sovereignty debt crisis sags export and a flagging property market dampens investment.

The country recorded an 8.1-percent annual growth in the first quarter, the slowest expansion in almost three years.

In May, the sub-index for new export orders of the non-manufacturing sector decreased by 2.2 percentage points month-on-month to 50.5 percent, the CFLP data show.

The sub-index for intermediate input prices lost 4.3 percentage points to 53.6 percent and that for charges slipped 1.8 percentage points to 48.5 percent, pointing to less inflationary pressure.

Authorities must prevent prices from falling too fast and paring company profits in some industries, Cai warned.

He noted that the sub-index for new non-manufacturing orders edged down merely 0.2 percentage points to 52.5 percent in May, reflecting relatively stable market demand.

Meanwhile, the sub-index for business activity expectations in May remained high at 65.4 percent, although it was down 0.7 percentage points from the previous month, Cai said.

That reflects non-manufacturing firms' optimism about the market and the sector will hopefully continue to grow steadily, he forecast.

The CFLP's non-manufacturing PMI is based on a survey of about 1,200 companies in 27 industries, including transportation, real estate, catering and software development.

China economy
economic slowdown

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