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China April official services PMI at 54.5 vs 55.6 in March

A worker walks past newly-made cement mill barrels at a heavy equipment manufacturing factory in Luoyang, Henan province May 1, 2013. REUTER
A worker walks past newly-made cement mill barrels at a heavy equipment manufacturing factory in Luoyang, Henan province May 1, 2013. REUTER

BEIJING (Reuters) - Expansion in China's services sector slowed in April, an official survey showed on Friday, in line with slower factory activity and reinforcing views that recovery in the world's second-largest economy remains modest and faces risks.

China's official purchasing managers' index(PMI) for the non-manufacturing sector fell to 54.5 in April from 55.6 in March, the National Bureau of Statistics(NBS) said on Friday.

Slowing growth in services showed that subdued expansion in manufacturing has begun to feed through to the rest of the economy, though the services industry has so far weathered the global slowdown much better than the factory sector.

"New orders for the services industry dropped below 50, lower than the historical average levels. The prices index also declined relatively sharply, showing operating activity is moderating," said Cai Jin, a vice president at CFLP, the China Federation of Logistics and Purchasing. (The 50 level separates contraction from expansion.)

The CFLP conducts the official survey together with China's National Bureau of Statistics.

"We should pay attention to supporting service industries and expanding consumption demand to enhance their role in supporting overall stable economic growth," Cai said in a statement accompanying the data.

Two recent PMIs showing cooling in manufacturing sector growth have already suggested the euro zone recession and sluggish U.S. demand may be risks to China's economic recovery, though economists see a mild pickup this year, aided by government support.

The official PMI's sub-index for construction fell to 62.4 in April from 62.5 in March.

The new orders sub-index fell to 50.9 from 52, while the index for new orders excluding construction dropped to 49.8 from 51.4 in March.

Firms in catering, transport and maintenance had fewer new orders in April, while new orders for hotels, telecommunications, broadcasting, television and satellite transmission services fared better, the NBS said.

China's economic growth unexpectedly stumbled in the first quarter, slipping to 7.7 percent versus 7.9 percent in the previous three month period, as factory output and investment slowed.

(Reporting by Xiaoyi Shao and Jonathan Standing)

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