China's service activity slows in Aug.

By Kim Young-gyo
HONG KONG, Sept. 5 (Yonhap) -- China's service activity slowed down for the fourth month in a row in August as the country continued its tightening monetary policies, an industry group said Monday.
The Purchasing Managers Index (PMI) for China's non-manufacturing sector came in at 57.6 last month, down from 59.6 a month earlier, according to the China Federation of Logistics and Purchasing (CFLP).
A reading of 50 or above represents an expansion of the sector compared to the previous month while a reading lower than 50 represents a contraction. The non-manufacturing sector accounts for less than 45 percent of China's economy.
Market watchers said the slowdown reflects the effect of property and credit tightening measures.
"Overall services sectors are set to slow as both credit and property tightening measures are filtering through," said Qu Hongbin, the chief China economist at HSBC.
Qu expected that China's credit tightening is likely approaching the end.
"We expect the monetary policy to shift to a neutral stance in the coming quarter when inflation slows meaningfully. This will support overall growth," he said.
China's consumer prices surged 6.5 percent on-year to a 36-month high in July, driven mostly by food prices, which jumped 14.8 percent from a year earlier. The figure was far above the Chinese government's 2011 yearly target of 4 percent.
In a move to curb soaring inflation, the central People's Bank of China has raised the benchmark interest rate three times this year while increasing the amount of money banks must keep in reserves six times.