China's non-manufacturing PMI drops to 53.9 in June

The purchasing managers' index (PMI) for China's non-manufacturing sector stood at 53.9 percent in June, down from 54.3 percent in May, according to official data released on Wednesday. A PMI reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction. The statistics were jointly released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP). The CFLP attributed the slight fall to slower growth in construction activity, which has been affected by seasonal factors, including higher temperatures and rainy weather. The PMI for the construction sector dropped 2.9 percentage points to 59.3 percent in June, according to the CFLP statement. In the service sector, the sub-indices for business activity and new orders both ended two consecutive monthly decreases, rising to 52.6 percent and 49.9 percent, respectively. Service industries, including express mail service, Internet information, telecommunications, environmental protection and public facilities management, all recorded a business activity PMI of more than 58 percent in June, according to Cai Jin, vice chairman of CFLP. An increasingly active service sector accounted for the steady growth in June's non-manufacturing activity and is an example of the positive effects of China's economic restructuring, the federation said in the statement. The sub-index for employment in the non-manufacturing sector moved up to 51.5 percent in June, staying above 51 percent for a third straight month. The index for June's new orders edged up 0.2 percentage points from a month earlier to 50.3 percent, while the figure for new export orders crossed the demarcation line by gaining 1.3 percentage points to 50.4 percent. However, Cai said demand in the real estate market remained weak, with its new orders index remaining below 50 percent for three consecutive months. The CFLP also warned of a trend of rising costs for the non-manufacturing sector. The sub-index for intermediate input prices continued to rise in June, up 0.6 percentage points to 55.0 percent. China's non-manufacturing PMI is based on a survey of about 1,200 companies in 27 industries. On Monday, the CFLP released the manufacturing sector's PMI, which fell to 50.1 percent in June from 50.8 percent in May. But PMIs for both manufacturing and non-manufacturing sectors have stayed above the boom-bust line of 50 percent for the entire second quarter, reflecting a continuous steady growth in the world's second largest economy, said Cai.