China July Services PMI Falls Sharply to 50.4, Lowest since September 2024; Composite at 50.8
China's services sector expanded at the slowest pace in 10 months in July, with the seasonally adjusted services PMI falling to 50.4 from 54.1 in June, a decline of 3.7 percentage points. The composite PMI retreated to 50.8 from 53.6, also a one-year low. New business growth slowed to its weakest in four months, while services exports rose for a third straight month. Employment increased for a third consecutive month, the longest expansion since the second half of 2024, driven by business growth, heavier project workloads and new service launches.
China's services purchasing managers' index (PMI) fell to 50.4 in July, down 3.7 percentage points from June's reading of 54.1 and marking the lowest level since September 2024. The seasonally adjusted index is compiled by S&P Global in partnership with RatingDog. The composite PMI also declined to 50.8 from 53.6 in June, hitting a one-year low. Despite the slower pace of expansion, services activity has remained in growth territory since January 2023, with the index holding above the 50 boom-bust line.
Factors supporting the expansion in business activity during the month included new business, new clients, project wins, and business development and growth in artificial intelligence-related services. New orders increased in July, though the pace of growth slowed to the weakest in four months. On international demand, services exports rose for a third consecutive month at a relatively strong pace. Survey responses indicated that higher overseas client demand was linked to exhibition activities, study tours, increased financial settlement business and corporate management optimisation.
On employment, services companies added workers for a third consecutive month, the longest stretch of expansion since the second half of 2024, although the pace of hiring slowed from June. The increase in headcount was attributed to business expansion, heavier project workloads and the launch of new services.