The purchasing managers' index (PMI) for China's non-manufacturing sector dropped 0.5 percentage point from a month earlier to 54.5 percent in March, new data showed Thursday.

The index tracks activity in non-manufacturing sectors, including construction, software, aviation, [Hong Kong company registration]railway transport and real estate, according to the China Federation of Logistics and Purchasing.

A PMI reading above 50 percent indicates expansion, while a reading below 50 percent reflects contraction.