Non-manufacturing PMI at six-month low

New orders grow at weakest pace

Growth in China's non-manufacturing sector slipped to a six-month low in July as new orders rose at their weakest rate in at least a year, official data showed Sunday, taking some of the shine off an industry that has been a bright spot in the Chinese economy this year.

The official Purchasing Managers' Index (PMI) for the non-manufacturing sector dropped to 54.2 in July from June's 55, the National Bureau of Statistics (NBS) said in a statement. That is the weakest reading since January 2014.

A reading above 50 in PMI surveys indicates an expansion in activity while one below the threshold level to contraction.

The slight retreat in the non-manufacturing sector comes at a time when China's factories have started to recover. The official manufacturing PMI rose to 51.7 in July, the strongest since April 2012, earlier data from the NBS showed.

A mixed performance from other segments in Sunday's PMI suggested that the non-manufacturing sector enjoyed an encouraging, albeit slightly muddy, outlook.

Sunday's survey showed a sub-index for business expectations rose to 61.5 in July from June's 60.4.

The measure for new orders remained flat at 50.7 in July compared with June, but down from 52.7 in May.

Cai Jin, vice president of the China Federation of Logistics and Purchasing, which publishes the non-manufacturing PMI in conjunction with the NBS, advised investors to not read too much into the divergence.

"The volatility in the various sub-indices for the July non-manufacturing PMI was not great," Cai said. "The market in general is still stable."

In contrast, he said weakness in China's property sector persisted last month due to seasonal factors and muted demand.

"The market remains subdued. Prices are still in a downtrend, and the declines have increased," he noted.

China's once-heated housing market has slowed this year as sales and prices turned south in their biggest pull-back in two years, driven in part by a cooling economy, and after the government tried for almost five years to calm the market.

But the extent and breadth of the downturn have surprised analysts, with many worrying that it is the biggest threat to the health of China's economy this year.

Nearly half of China's local governments have started relaxing curbs on home purchases this year, reversing controls that were instituted from as early as 2009.