China’s service activity expanded at slowest pace this year in Aug, business confidence hit weakest since Dec 2022 – private survey
DATA MACRO
China’s service activity expanded at slowest pace this year in Aug, business confidence hit weakest since Dec 2022 – private survey
DATA MACRO

China’s service activity expanded at slowest pace this year in Aug, business confidence hit weakest since Dec 2022 – private survey

 

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China’s service activity expanded at a significantly slower pace in August, showed a private survey, as weak demand continued to dog the world’s second-largest economy.

The Caixin/S&P Global services purchasing managers’ index (PMI) for August comes in at 51.8, marking the lowest level so far this year, well below expected 53.5 and sharply lower than a reading of 54.1 in the previous month. 

The data broadly aligned with the official services PMI released last week, which showed the sector continued to trend downwards. China’s official non-manufacturing PMI for August coming in at 50.5, hitting the lowest so far this year for the second straight month and slowing from the 51.5 in the previous month.

Caixin/S&P’s composite PMI, which includes both manufacturing and services activity, edged down to 51.7 from 51.9 in July, marking the eighth straight month of expansion, albeit the weakest since January.

The expansion of service demand and supply both slowed in August, with the sub-index for business activities hitting the lowest this year and that for new orders also slowed, showed the survey.

In particular, exports weakened significantly, with the sub-index for new export orders slipping into the contraction for the first time this year. 

The sub-index for employment remained in expansion for the 7th consecutive months and was largely in line with that in July.

As raw material, labor and fuel costs continued to increase, the sub-index for input prices remained in the expansionary territory, though hitting the lowest in six months, while factory-gate prices also slowed. 

Due to insufficient market demand, the service sector’s confidence weakened marginally, with the sub-index for business expectation hit the lowest level since December 2022, though remaining in expansion.

“The marginal slowdown in the services sector’s supply and demand expansion offset the improvement in manufacturing production and demand,” said Wang Zhe, an economist at Caixin Insight Group, adding “there was still considerable downward pressure on the economy.”