China's non-manufacturing sector shrinks in Feb

BEIJING -- China's non-manufacturing sector shrank in February, an official monthly survey showed on Sunday.

The Purchasing Managers Index (PMI) of the non-manufacturing sector declined to 54.5 percent in February, down 1.7 percentage points from January, the China Federation of Logistics and Purchasing (CFLP) said in an online statement.

The figure marked the first decline since October, said CFLP.

A PMI reading above 50 percent indicates expansion from the previous month, while a reading below 50 percent indicates contraction.

The sub-index of intermediate input prices bore the biggest loss of 2 percentage points to 56.2 percent in February.

The sub-index for new orders retreated 1.9 percentage points from a month earlier to 51.8 percent, while new export orders also lost 1 percentage point to 51.6 percent.

Bucking the trend as five industries reaching beyond 60 percent in January, none hit 60 percent in February while water transportation even dropped to below 50 percent. Only construction and services ranged between 50 percent and 60 percent during the month.

Cai Jin, vice chairman of the CFLP, attributed the decline mainly to a dip in construction during the period, when the Spring Festival holiday, an occasion for family reunions, falls.

Business activity in house building and decoration saw remarkable declines while new orders for civil engineering hit a record high, with expectations of further steady expansion of infrastructure investment in 2013, the CFLP said.

Despite the shrink, consumption during China's most important festival helped the index to maintain a comparatively high level of 54.5 percent.

The holiday especially stimulated the transport and retail sectors. Air transport topped all the other industries in business activity and new orders, according to Cai.

The seven-day holiday, also known as "golden week," realized 203 million trips, up 15.1 percent year on year, with a gross revenue of 117.06 billion yuan ($18.81 billion), an official report on tourism showed.

Retail and information consumption sectors such as television and satellite services also performed well, the CFLP said.

However, catering business continued to slump to a new low, marking the second consecutive reading of below 50 percent, rooted in a public response to the central government's calls for a frugal lifestyle, which has also led government organs and companies to reduce extravagance and cut spending in restaurants.

Although the holiday effects restricted excessive expansion in construction and upstream price rises, Cai still warned of possible pressures caused by sharp price rises.

Other sub-indices, such as employment and business outlook increased from a month earlier.

The figures followed Friday's release of a 51.1-percent figure for manufacturing sector PMI, a sign of steady growth in China's economy.

The CFLP's non-manufacturing PMI is based on a survey of about 1,200 companies in 27 industries, including transport, real estate, catering and software development.