China's non-manufacturing PMI drops in January

China's service sector activity slowed in January, but is still a robust economic driver, an official monthly survey showed on Sunday.

The purchasing managers' index (PMI) for the non-manufacturing sector retreated to 53.7 in January from 54.1 in December, according to a report released jointly by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP).

The index saw the lowest reading since last February but is still expanding.

A reading above 50 indicates expansion, while a reading below 50 represents contraction.

Majority sub-indices also dropped. The sub-index for the construction industry fell slightly to 56.9, while that for services slipped to 52.9 in January from 53.3 in December.

The new order sub-index for the entire non-manufacturing sector retreated to 50.2 in January, down 0.3 percentage point from the previous month.

"The index, although retreating month on month, still remained at high levels and indicated strong impetus of the service sector that has become increasingly significant in driving the economy," said Zhao Qinghe, an NBS senior statistician.

Zhao said services related to residential consumption began rising as the Spring Festival approaches, with sectors of retail, telecommunications, software and postal service growing steadily.

CFLP analyst Wu Wei said consumption has huge potential for further growth and will be effective in boosting employment and propping up the economic growth.

China's burgeoning service sector has begun to replace the traditional engine of manufacturing to drive economic growth. The added value from the tertiary sector accounted for 48.2 percent of the GDP in 2014, the NBS data showed.

In addition, Wu forecast the construction industry will soon pick up thanks to rising infrastructure projects at home and abroad, but he warned of lingering deflationary risks.

The PMI samples 1,200 non-manufacturing enterprises of various sizes nationwide. It tracks activity in sectors including services, construction, software, aviation, railway transport and real estate.