China's services sector slows, less pressure to tighten policy

Growth in China's services sector slowed in February. The National Bureau of Statistics reported that China's non-manufacturing PMI stood at 54.5 last month, down from 56.2 in January and the lowest in five months.

The slower growth in services, together with the slower growth in manufacturing reported last week, may ease pressure for China to tighten monetary policy despite possibly higher inflation this year. From Bloomberg:

The PBOC is “fully confident of controlling inflation this year,” Deputy Governor Yi Gang said in Beijing yesterday. While the nation faces “some” pressure, he estimated the consumer- price index will rise about 3 percent in 2013, compared with 2.6 percent last year...

Song [Guoqing], one of three academics who sit on the PBOC’s monetary policy committee, said inflation will be “relatively low” this month due to slowing food-price gains. Compared with January and February, the pressure for tightening monetary policy and macro- economic controls “has in my view been relieved,” he said at a forum in Beijing.