Non-manufacturing PMI drops slightly in March

The purchasing managers' index (PMI) for China's non-manufacturing sector dropped slightly to 54.5 in March from 55 a month ago, data from the National Bureau of Statistics (NBS) showed Thursday.

The decline follows a rebound in February, when the index came up from its lowest level in more than a year in January. A PMI reading above 50 indicates expansion, while a reading below 50 reflects contraction.

However, Cai Jin, vice chairman of the China Federation of Logistics and Purchasing, remains optimistic.

"The March figure shows the non-manufacturing sector is still within a range of mode-rate and relatively fast growth," he said.

He attributed the slight weakness in March mainly to a drop in business in the tourism, transport and catering sectors after high demand during the Spring Festival holidays from January 31 to February 6.

The index for business outlook rose by 1.6 to 61.5 in March from 59.9 in February, marking strengthening corporate confidence. Employment rebounded to 51.4 from February's 50.9, according to the NBS.

Separately, a private survey showed on Thursday that -acti-vity in China's services industry rose to a four-month high in March.

The Markit/HSBC Services Purchasing Managers' Index (PMI) increased to 51.9 in March from February's 51.0, buoyed by strong employment, a second successive rise taking it further above the 50 level.

"The HSBC China Services PMI suggests a modest improvement of business activities in March, with employment expanding at a faster pace," Qu Hongbin, HSBC chief China economist, said in a statement accompanying the release.

"However, combined with the weaker manufacturing PMI reading, the underlying strength of the economy is -softening, which should ultimately weigh on the labor market," he said.

The HSBC manufacturing PMI, which was also released on Tuesday, dipped to an eight-month low of 48 in March from a final reading of 48.5 in February, partly due to weakening domestic demand.

China's economy expanded by 7.7 percent last year, flat from a year earlier and representing the lowest growth rate since 1999.

The central government has set this year's growth target at 7.5 percent for a third straight year.

The NBS is scheduled to release the GDP figure for the first quarter on April 16. Many analysts have forecast that the growth rate may fall below 7.5 percent.