The official Purchasing Managers Index for non-manufacturing sectors fell to 48.4 in February from 52.9 in January, the National Bureau of Statistics said on Saturday, providing the central bank further reason to ease policy in an effort to bolster economic growth.
The reason was soft demand for services after the early Spring Festival, the National Bureau of Statistics said in a statement on its website. The sub-index of new orders fell to 46.1 in February from 48.5 the previous month. The services PMI index is intended to provide a snapshot of conditions in the services sector, which accounts for less than 45 percent of China's economy, a much smaller share than in developed countries.
China's factories grew more than expected in February as export orders for big firms bounced back, a government survey showed, while a private-sector report portrayed a different picture of smaller firms lagging behind the rebound. Still, China's economy faces formidable headwinds as exports falter due to weakening demand in the United States and Europe, alongside a downturn in the once red-hot property sector in response to tightening steps by Beijing.
China's annual economic growth is widely expected to slow to just over 8 percent in the first quarter from 8.9 percent in the previous quarter, the fifth consecutive quarter of slowdown. Many analysts expect the central bank to continue its steady policy easing by cutting the amount of cash that banks must hold in reserve to crank up credit to ward off sharper growth slowdown. China announced a cut in its reserve requirement ratio by 50 basis points to 20.5 percent on February 18, releasing about 400 billion yuan ($63 billion) that could be used for bank lending. It was the second 50-bp cut in the RRR in three months.
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