Services sectors report strong growth in June

Non-manufacturing activity robust despite month-on-month drop in PMI

China's non-manufacturing purchasing managers' index (PMI) dropped to 55 points in June from a six-month high of 55.5 in May, official data showed on Thursday.

The non-manufacturing PMI, compiled by the National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP), tracks activity in sectors including construction, software, aviation, railway transport and real estate.

In spite of the slight drop, non-manufacturing activity was still at a relatively high level, as the index was still 5 points above the boom-bust line of 50, said Cai Jin, deputy chief of the CFLP. A PMI reading above 50 indicates expansion, while a reading below 50 reflects contraction.

The sub-index for new orders dropped 2 points to 50.7, indicating far less domestic orders than a month earlier. New export orders saw the largest decline of 2.5 points to stay at 50.2 in June.

The business outlook index edged down slightly to 60.4 points in June from 60.7 for the previous month, showing weaker confidence among companies in the future prospects of the sector, data showed.

Production-related services sectors saw a strong upward trend, especially those closely related to manufacturing, Cai said.

The business activity index, new orders index and new exports index for manufacturing-related services sectors all experienced sharp rises, showing the impact of the manufacturing sector's strong performance.

Meanwhile, the HSBC's non-manufacturing PMI, which tracks smaller firms, rebounded to 53.1 in June from 50.7 in May, well above the 50-point level, data released by HSBC showed on Thursday.

"The expansion in the services sector reinforces the recovery seen in the manufacturing sector, and signals a broad-based improvement over the month," said Qu Hongbin, chief economist for China at HSBC.

"We think the economy is slowly turning around, and expect the recovery to remain supported by accommodative policies on both the fiscal and monetary fronts over the coming months," he noted.

On Tuesday, the CFLP announced that China's manufacturing PMI rose to a six-month high of 51 points in June, performing strongly at the end of the second quarter, and an encouraging sign that the economy is further stabilizing.

Also on Tuesday, the China Banking Regulatory Commission adjusted the way the loan-to-deposit ratio is calculated for commercial banks.

Six sub-items of the loans, including lending to the small and medium-sized enterprises and agricultural sectors, will be excluded from the calculation of the loan-to-deposit ratio.

China's services sector accounted for 46.1 percent of the country's GDP in 2013, outperforming the industrial sector for the first time.