Business activity in China’s non-manufacturing sector expanded in August at a slightly slower pace from June and July.
The purchasing managers’ index, or PMI, for the non-manufacturing sector fell to 53.4 in August, down from 53.9 for July, according to data from the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
Non-manufacturing PMI tracks business activities of the service and construction sectors. A reading above 50 indicates expansion, while below 50 represents contraction.
The August reading was well above the expansion-contraction line, although it was lower than the start of the quarter. The service sector sub-index stood at 52.6 in August, down from 52.8 for July, indicating slower growth in the industry.
The sub-index for the construction sector retreated to 57.8 in August, down from 60.1 for July, suggesting waning construction activities.
Meanwhile, the new order sub-index in general fell to 49.6 for August, falling to contraction territory from 50.1 for July.
China’s official manufacturing Purchasing Managers’ Index (PMI) fell to 49.7 in August from 50.0 in July.
“The PMI was below 50, which is a psychologically important level and puts into real focus the fact that China is contracting,” said Joe Rundle, a senior sales trader at ETX Capital.
“With the weak data coming out, we’re going to see the negative sentiment from the last few weeks continuing.”
Growth in the U.S. manufacturing sector slowed to its weakest pace in almost two years in August, according to a report from financial data firm Markit.
Adding to the nervousness, International Monetary Fund head Christine Lagarde said global economic growth was now likely to be weaker than had been expected just a few months ago.
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