China non-manufacturing growth eases

news_iconGrowth slowed in July for China’s non-manufacturing sector as inflows of new orders continued to weaken, according to the latest survey by the China Federation of Logistics and Purchasing (CFLP).

The seasonally adjusted purchasing managers’ index for the services sector fell to 55.6 in July from 56.7 in June.

Signaling weak demand conditions both at home and abroad, the new orders index fell to 53.2 in July from 53.7 in the month prior.

Business expectations among services firms also dropped during the month with the corresponding index falling to 63.9 from 65.5 in June.

The data suggests that the economy is slowing mainly on account of the worsening debt crisis in Europe, which still remains China’s largest export market. CFLP’s survey of the factory sector showed that growth eased for the third consecutive month in July over weak new order flows.

In contrast to the CFLP surveys, a report from Markit Economics showed Friday that service sector in China expanded at a faster pace in July. The headline HSBC business activity index rose to 53.1 in July from 52.3 in June.

Markit Economics Global Services PMI reported a drop in employment from 51 in June to 49.8 in July, while input prices rose in almost all of the nations covered by the survey – with the sole exception being Hong Kong.

However, the composite output index – which covers both manufacturing and services – rose to 51.9 in July from 50.6 in June.

HSBC Chief Economist Hongbin Qu said the pace of expansion suggested by the composite PMI remained only “modest” and is not sufficient to warrant a “meaningful” recovery.