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China official Service PMI expands at a slower pace
By Wang Yanlin |
August 3, 2012, Friday
|
Online Edition
Online Edition
China's non-manufacturing activities expanded at a slower pace in July due to weakening domestic demand, reflecting the need for more stimulus to sustain growth in the world's second-largest economy.
The official non-manufacturing Purchasing Managers' Index, which gauges the performance of largely state-owned enterprises in the service industry, declined to 55.6 in July from June's 56.7, the China Federation of Logistics and Purchasing and the National Bureau of Statistics said this morning.
A reading above 50 means expansion, and the opposite points to contraction.
"Although the index dropped a bit, it still indicates expansion in the sector," said Li Maoyu, an analyst at Changjiang Securities Co. "It confirms the economy is stabilizing with previous measures starting to take effect, but calls for more efforts to strengthen that process."
Component indices showed new business orders dropped 1.1 percentage points from a month earlier to 55.6 in July, a reflection of slower demand growth for services.
Meanwhile, the headline Business Activity Index, produced by HSBC and Markit, posted 53.1 in July, up from 52.3 a month earlier, indicating better performance in private and export-oriented service companies.
"The modest gain in July's HSBC services and manufacturing PMIs implies that the slowdown of the Chinese economy is likely to have stabilized," said Qu Hongbin, chief China economist at HSBC.
"However, the pace of expansion suggested by the data remains only modest and is not sufficient to warrant a meaningful recovery. To secure growth and employment, China still needs to step up policy easing, and fast falling inflation allows them to do so."
The difference between the official non-manufacturing PMI and its counterpart released by HSBC is created by different samples in different segments of the sector.
The official non-manufacturing Purchasing Managers' Index, which gauges the performance of largely state-owned enterprises in the service industry, declined to 55.6 in July from June's 56.7, the China Federation of Logistics and Purchasing and the National Bureau of Statistics said this morning.
A reading above 50 means expansion, and the opposite points to contraction.
"Although the index dropped a bit, it still indicates expansion in the sector," said Li Maoyu, an analyst at Changjiang Securities Co. "It confirms the economy is stabilizing with previous measures starting to take effect, but calls for more efforts to strengthen that process."
Component indices showed new business orders dropped 1.1 percentage points from a month earlier to 55.6 in July, a reflection of slower demand growth for services.
Meanwhile, the headline Business Activity Index, produced by HSBC and Markit, posted 53.1 in July, up from 52.3 a month earlier, indicating better performance in private and export-oriented service companies.
"The modest gain in July's HSBC services and manufacturing PMIs implies that the slowdown of the Chinese economy is likely to have stabilized," said Qu Hongbin, chief China economist at HSBC.
"However, the pace of expansion suggested by the data remains only modest and is not sufficient to warrant a meaningful recovery. To secure growth and employment, China still needs to step up policy easing, and fast falling inflation allows them to do so."
The difference between the official non-manufacturing PMI and its counterpart released by HSBC is created by different samples in different segments of the sector.
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