THE retail and transport sectors spurred China's service industry to grow for the fourth month in January, lifting the service PMI to climb to the highest in five months last month.

The non-manufacturing Purchasing Managers' Index edged up 0.1 percentage point from December to 56.2 percent in January, the National Bureau of Statistics and the China Federation of Logistics and Purchasing said in a joint statement yesterday. A reading above 50 signals expansion.

"The figure suggested the stable situation of the service industry is further consolidated," said Cai Jin, vice chairman of CFLP.

The Shanghai Composite Index last week posted the best weekly gain since October 2011. Strength in services may assist a shift to a consumption-driven economy as the government targets more sustainable growth and factory output contributes to record pollution.

The service sector's business activity sub-index added 0.2 percentage point to 54.9 percent, and the sub-indices for the others, including retail, aviation and water transport, were all above 60 percent.

The retail business bolstered strongly the growth in the service PMI with sales galloping in the month ahead of the Lunar New Year which starts on Sunday.

"The pick up in the consumer service and retail sector suggested a strong potential for domestic consumption," Cai added.

January's service PMI raced to the highest level in five months on the back of the government's pledge to boost domestic consumption and cut reliance on exports.

The new order sub-index shed 0.6 percentage point to 53.7 percent, and the construction sub-index dipped 0.5 percentage point to 56.7 percent in January.

The fastest gainer among the five sub-indices, the sub-index of intermediate input prices climbed for the second month by rising 4.4 percentage points monthly to 58.2 percent.

The contribution of services to the economy has grown over the past decade as rising incomes have spurred demand for televisions, housing, mobile phones and travel. Almost 36 percent of the working population was employed in such industries in 2011, up from 31.3 percent in 2005, government data show.

The services industries accounted for 45 percent of gross domestic product last year, Ma Jiantang, head of the statistics bureau, said on January 18, up from 41 percent in 2003. The government is seeking to increase the share to 47 percent by 2015.

The services industry has so far weathered the global slowdown better than the factory sector, with the PMI consistently signalling healthy expansion and hitting a 10-month high of 58.0 in March.

That is partly due to a maturing economy as well as a historic shift in the last decade leading a majority of Chinese to live and work in cities rather than the countryside.

The non-manufacturing PMI is based on responses from purchasing managers at 1,200 companies in 27 industries including banking, retailing, construction and transport. A new seasonally adjusted series of the gauge began in March 2012 and the data were revised back to March 2011.