China’s PMI for Services Sector Declines Slightly in July

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China’s PMI for Services Sector Declines Slightly in JulyChina’s services Purchasing Managers’ Index fell to its lowest level in six months in July after new orders increased by the slowest pace in more than one year. The official non-manufacturing sector PMI fell to 54.2 in July compared to 55 in June, reported the National Bureau of Statistics on Sunday.

The gauge was lowest since January. Nonetheless, a measure above 50 is an indicator of expansion, meaning the services sector expanded, though not as much as in June, reported Reuters.  The services industry, which contributed 45 percent of China’s GDP in 2012 and nearly half the jobs in the world’s second-largest economy, is expected to continue growing as the economy approaches maturity.

Two PMIs for the manufacturing sector published on Friday showed that factory activity grew the fastest in more than 1 ½ years in July, as Beijing’s stimulus measures continue to bear fruit.

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China’s factories have started picking up as demand locally and abroad begin to pick up, ironically as the services sector dropped. However, Cai Jin, the vice president of China Federation of Logistics & Purchasing, which published the services PMI together with the Chinese government, told investors not to take the divergence seriously.

The Sunday’s report revealed that the sub-index of business expectations increased to 63.9 in July compared with June’s reading of 62.9. The measure of new orders plunged to 50.3 compared with 50.9 in June. Production prices rose to 58.2 in July compared with 57.1 a month earlier, with final sales prices rose to 52.4 compared to 51.2 in June.

China’s economic growth increased slightly in April-June quarter to 7.5 percent, compared with 7.4 percent in the first quarter, which was the lowest in 18 months. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com