Economy

Non-manufacturing growth continues decline

(Xinhua)
Updated: 2011-07-04 10:42

BEIJING - Growth in China's non-manufacturing sector continued to slow down in June, with the sector's Purchasing Managers Index (PMI) seeing a sharp decline, the China Federation of Logistics and Purchasing (CFLP) said Sunday.

The non-manufacturing sector's PMI, a key economic indicator, fell to 57 percent in June from 61.9 percent in May, the CFLP said.

A PMI of 50 percent or greater indicates expansion, while a PMI of less than 50 percent indicates contraction.

Related readings:  Markets get a boost from June PMI data  China manufacturing PMI hits 50.9% in June  Markets boosted by lower PMI - May 3  PMI reveals 'appropriate adjustment' in growth

Although the June index marked the second consecutive month of declining growth, the figures indicate that China's non-manufacturing sector has still maintained relatively fast expansion, the CFLP said.

The non-manufacturing sector's PMI was 62.5 percent in April, 60.2 percent in March, 44.1 percent in February and 56.4 percent in January.

Major sub-indices fell as well, with the new orders index down 3 percentage points from May to hit 53.5 percent in June. The intermediate input price index declined to 61.6 percent.

CFLP vice president Cai Jin attributed the sharp fall in the new order index to a slowdown in commercial purchasing activities.

"We will continue to monitor the situation and evaluate whether this bodes a further slowdown for business activity and economic growth," Cai said.

Cai said that slight declines in the intermediate input price index and the price index for charges indicate that "the trend of excessive price increases has been contained. Prices will remain high but will gradually stabilize."

China's inflation rate has remained stubbornly high despite the government's efforts to stem price rises. The country's consumer price index (CPI), a main gauge of inflation, rose by a 34-month high of 5.5 percent in May from a year earlier.

However, analysts are concerned that stronger tightening measures targeting inflation will weigh down the growth of the world's second-largest economy. Previously published economic data has shown that the country's economic growth is already beginning to slow.

The June PMI for the country's manufacturing sector is a strong example. According to the CFLP, the manufacturing sector's PMI, which is regarded as an even more important indicator of China's economic health than the non-manufacturing sector's PMI, expanded at its slowest pace in 28 months in June, falling by 1.1 percentage points month-on-month to hit 50.9 percent.

China is expected to publish more significant economic data on July 15, including the country's June CPI growth and data related to industrial production and economic growth for the first half of the year.