OREANDA-NEWS. September 08, 2011. The growth of China's non-manufacturing sector slowed in August, as indicated by a decline in the Purchasing Managers Index (PMI), the China Federation of Logistics and Purchasing (CFLP) said.
 
The non-manufacturing sector's PMI, a key economic indicator, fell to 57.6 percent in August from 59.6 percent one month earlier, the CFLP said in a statement on its website.
 
A PMI of 50 percent or higher indicates expansion, while a PMI under 50 percent indicates contraction.
 
Despite a fall in the PMI index, China's non-manufacturing sector still managed to grow, as the index remained above the boom-or-bust line of 50, the CFLP said.
 
The PMI index rose for the first time in three months in July, after dropping from the year's high of 62.5 percent in April to 57 percent in June.
 
Major sub-indices fell month-on-month in August, with the index for employment down 0.4 percentage points to 56.1 percent last month, while the new export order index went down 2.4 percentage points to 54.1 percent.
 
The August figures indicate a slowdown in the world's second-largest economy. China's gross domestic product (GDP) rose by 9.5 percent year-on-year in the second quarter of 2011, tapering off slightly from the 9.7-percent growth posted in the first quarter of this year and 9.8 percent in the fourth quarter of last year.
 
However, the slowdown in the economy is "reasonable and within expectations," Premier Wen Jiabao wrote in an article in Qiushi, the flagship magazine of the Communist Party of China (CPC) Central Committee.
 
The federation's non-manufacturing PMI is based on a survey of about 1,200 companies in 20 industries, including transportation, real estate, retailing, catering and software.
 
NEW ORDERS DROP
 
The overall new order index declined to 54.1 percent from 55.6 percent in July, while the new order index for the building industry plunged 8.3 percentage points to 55.9 percent last month.
 
Cai Jin, vice president of the CFLP, attributed the drop in the new order index for the building industry to decreased railway investment and a slowdown in infrastructure investment growth.
 
The country's fixed-asset investments in railways fell 2.1 percent year-on-year to 276.2 billion yuan (43.16 billion U.S. dollars) for the first seven months of the year, according to data from the National Bureau of Statistics.
 
China suspended approvals of new railway projects and ordered thorough safety checks for its railway system after a fatal collision between two bullet trains killed 40 people on July 23.
 
"Despite the slowdown in August, the building industry will expand steadily over the rest of the year, buoyed by the country's massive affordable housing construction and increased investment in water conservancy facilities," Cai said.
 
INTERMEDIATE INPUT PRICES FALL
 
The intermediate input price index dipped to 60.2 percent in August, the lowest level this year, from 63.1 percent in July, signaling that the country's consumer prices are stabilizing, the CFLP said.
 
The input price index for the logistics sector dropped dramatically last month, reflecting the country's measures to reduce road tolls, the federation said.
 
The government adopted a slew of measures to curb inflation by steadily raising interest rates and ordering banks to keep more money in reserve. It also tightened bank lending and introduced home purchase limits in the municipalities of Beijing and Chongqing.
 
However, the country's consumer price index, a main gauge of inflation, has remained stubbornly high. The index accelerated to a 37-month high of 6.5 percent in July, pushed up by soaring food prices.
 
The inflation rate for August, which is scheduled to be released next week, is forecasted to stay around 6 percent.
 
The PMI for the country's manufacturing sector rebounded to 50.9 percent in August from a 29-month low of 50.7 percent in July, the CFLP said.