Non-manufacturing sector less active in Nov

Updated: 2011-12-03 13:35


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BEIJING - The growth of China's non-manufacturing sector slowed further in November, as indicated by the drop of the Purchasing Managers Index (PMI), the China Federation of Logistics and Purchasing (CFLP) said Saturday.

The non-manufacturing sector's PMI, a key economic indicator, fell to 49.7 percent in November from 57.7 percent one month earlier, the CFLP said.

A PMI reading above 50 percent indicates expansion from the previous month, while below indicates contraction. 

Extending a month-on-month drop in October, the figure marks the second lowest reading this year, higher than the 44.1 percent registered in February.

It also comes after China's PMI, a preliminary indicator of the country's manufacturing activity, slumped to 49 percent in the same period, indicating contraction for the first time since its last under-50-percent reading in February 2009.

Major sub-indices for the non-manufacturing sector in November fell month-on-month.

The index for new orders posted the biggest drop, down 5.3 percentage points to 47.2 percent while that for new export orders dropped 4.8 percentage points to 45.6 percent.

"Less active consumption in the off-season and the sluggish demand in the construction sector combined to weigh down the index," said Cai Jin, vice president of the CFLP.

The index for intermediate input prices retreated 1.3 percentage points to 54.4 percent, which suggests that inflation's negative impact on the economy is tapering off, the CFLP said.

China's CPI eased from a 37-month high of 6.5 percent in July to 5.5 percent in October.

Bucking the trend, the index for business outlook edged up 0.1 percentage points to 60.7 percent.

The federation's non-manufacturing PMI is based on a survey of about 1,200 companies in 20 industries including transport, real estate, retailing, catering and software.

Weak consumption in the period contributed to a significant pullback in indices for retailing and catering businesses. The new orders index of consumption services slipped to 44.9 percent, the lowest among the 20 industries.

But the CFLP expects the industry to gradually pick up steam as the upcoming New Year and Spring Festival will revive demand.

Checked by the government's grip over the property market, new order indices in construction and property industries went below 50 percent, a sign that investments in the two sectors are of a dwindling position and losing their power to drive the economy.

To contain runaway home prices, the Chinese government has put in place a slew of measures to regulate the sector, including tighter monetary policies, higher down payments, restrictions on second-home purchases and property tax trials, slowing down property-related business activities.

Business outlook index for the construction industry is the lowest among all industries, settling at 52.4 percent in November.

Meanwhile, logistics outperformed other industries, with its PMI up 3.5 percentage points to 56.5 percent. The index for new orders in the sector snapped the downward trend for consecutive months to reach 52.5 percent, up three percentage points month-on-month.

The CFLP attributed the surge to the growing demand to reserve commodities such as coal and ore for the winter.

"Overall, the latest reading reflects China's tightening moves on inflation, and the country should keep the adjustments on a steady and sound track," Cai said, adding China should attach more importance to spurring the domestic engine to keep the growth sustainable.