China services' slow uptick highlights mildness of recovery

Sun Feb 3, 2013 12:08am EST
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By Jonathan Standing

BEIJING (Reuters) - Growth in China's increasingly important services sector rose for the fourth straight month in January, though the slim increase added to evidence that the recovery in the world's second-largest economy remains a modest one.

China's official purchasing managers' index (PMI) for the non-manufacturing sector rose to 56.2 in January from 56.1 in December, the National Bureau of Statistics (NBS) said on Sunday.

The figure follows the bureau's PMI for the manufacturing sector on Friday, which eased to 50.4 in January, missing market expectations. A reading above 50 indicates growth is accelerating, while one below 50 indicates it is slowing.

"This marginal rise of non-manufacturing PMI again casts doubt on the strength and sustainability of the recovery," said Zhang Zhiwei, chief China economist at Nomura in Hong Kong.

He noted that new orders declined, pointing to weaker demand, while a rise in input service prices suggested inflationary pressure.

"We believe the government cannot further loosen policies given inflationary pressure, as growth may weaken beyond Q1 as policy easing runs out of steam," Zhang said.

The NBS said in a statement that the retail, air cargo and shipping sectors all reported levels of activity above 60 in January, though the construction sector, one of the big drivers of growth in December, ticked down slightly to 61.6 from 61.9.

The new orders index fell to 53.7 from the previous month's 54.3, showing a slowdown in demand even though the overall figure remained well above the 50 mark separating growth from contraction.   Continued...