GROWTH in China’s services sector slowed in July, with the official purchasing managers’ index (PMI) for the industry dipping to 54.2, government data showed yesterday.

    That compares with a reading of 55 in June, according to the National Bureau of Statistics (NBS). A reading above 50 in PMI surveys indicates an expansion in activity while one below the threshold points to a contraction.

    A spate of economic indicators released earlier during the weekend suggested that the world’s second-largest economy is experiencing a mild recovery as a flurry of government stimulus measures kick into effect.

    Official PMI rises

    Activity in China’s vast factory sector expanded at the fastest pace in 27 months in July on stronger demand, a government survey showed.

    China’s official manufacturing PMI rose to 51.7 in July — the strongest since April 2012 and up from 51 in June, the NBS said Friday. Economists had expected a reading of 51.4.

    The official survey showed a broad-based recovery in manufacturing activity in July, with 10 out of the 12 sub-indicies pointing to improvement from the previous month.

    A sub-index for new orders, a measure of both foreign and domestic demand, edged up to 53.6 in July from 52.8 in June, marking the highest level since May 2012.

    Export orders climbed to 50.8 in July from 50.3 in June, indicating a modest pick up in global demand.

    As one of the leading indicators that help gauge economic momentum, the official PMI data is closely watched by the market and an improvement in the reading could bode well for other July indicators.

    Zhang Liqun, an economist at the Development Research Center, said in the statement: “This indicates that a shift from a slowdown to stabilization in economic growth has been fully formed and the trend will continue for a period of time.”

    A private survey also showed Friday that the HSBC/Markit China manufacturing PMI climbed to 51.7 last month, up from June’s 50.7 but slightly below a preliminary reading of 52.

    The government has unveiled a series of modest stimulus measures since April, including targeted reserve requirement cuts for some banks and hastening construction of railways and public housing projects, to give a lift to economic growth, which dipped to an 18-month low in the first quarter.

    In response, economic growth quickened to 7.5 percent in the second quarter from an 18-month low of 7.4 percent between January and March.

    Some economists say the economic recovery still hinges on the magnitude of the Central Government’s pro-growth steps and whether the government can successfully curb the risks stemming from a cooling property sector.

    China’s top leadership pledged Tuesday that it would focus more on targeted measures to help shore up the economy, while keeping macro economic policies stable and consistent.

    Reasonable growth

    The central bank will keep up reasonable growth in credit and social financing and fine-tune its monetary policy in a timely way, the bank said Friday.

    The remarks by the People’s Bank of China came after surveys showed China’s factories posted strongest growth in at least 1-1/2 years in July.

    “The Central Bank shall maintain stable monetary policy, to keep continuity and stability in policy,” the PBOC said in a quarterly policy document. “To maintain appropriate liquidity, and achieve reasonable growth in credit and social financing.”

    The PBOC also said China’s economy would maintain stable growth in the coming period.

    (SD-Agencies)