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Reuters

Growth in China’s services activity accelerated in July helped by new orders, although momentum in overseas demand eased to its slowest pace in 11 months, a private-sector survey showed on Monday.
The Caixin/S&P Global services purchasing managers’ index (PMI) rose to 52.1 from 51.2 in June, pointing to expansion for the 19th straight month.
The Caixin/S&P Global index covers mostly private and export-oriented companies and the 50-mark separates expansion from contraction on a monthly basis.
The sector expanded at its fastest pace since May, beating a median forecast of 51.5 in a Bloomberg survey of economists, pointing to resilience that may alleviate concerns over the economy’s outlook after weak official figures.
Last week, the official services PMI showed the sector stalled in July from growth in June, with retail sales, capital market services and real estate service industries all shrinking.
The Caixin/S&P survey showed that the new orders subindex rose to 53.3 in July from 52.1 in June, while the gauge of overseas demand showed the smallest expansion since August 2023.


Service providers grappled with growing costs for raw materials, wages and freight, but employment rose at the fastest pace in 11 months.
The Caixin/S&P’s composite PMI, which tracks both the services and manufacturing sectors, eased from June but remained in expansionary territory.
The Caixin manufacturing PMI fell into contraction territory for the first time in nine months in July, data released last week showed, a sign the country’s export machine might be cooling.
“Although the Caixin services PMI increased last month which meant the average of the service PMIs also rose, we do not think this changes the picture much that the third quarter got off to a weak start,” said Gabriel Ng, assistant economist at Capital Economics.
“All told, the average of the composite PMIs still declined substantially last month. Looking ahead, the ramping up of government policy support should aid a recovery in activity in the coming months.”
The world’s second-largest economy grew much more slowly than expected in the second quarter and faces deflationary pressures and a protracted property slump, with retail sales growth in June grinding to its weakest pace since early 2023.
More significant domestic stimulus may only become plausible next year in the face of potentially stronger external headwinds
Citi
“Prices at the composite level remained weak, on the sales front in particular, further squeezing the space for company profits,” said Wang Zhe, senior economist at Caixin Insight Group.
The world’s second-largest economy has performed unevenly this year, with manufacturing at times a bright spot while consumption has been weighed down by a prolonged real estate crisis.
And last week, China’s leaders signalled that fiscal support for the rest of the year will “focus on consumption”, aiming to boost incomes and social welfare, a shift long advocated by many economists who said the country’s economic model relies too heavily on investment.
“Without going beyond the reactive and incremental easing mode, however, the confidence could be still lingering at low levels in coming months,” said economists at Citi.
“More significant domestic stimulus may only become plausible next year in the face of potentially stronger external headwinds.”
Additional reporitng by Bloomberg


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Caixin/S&P Global services purchasing managers’ index (PMI) rose to 52.1 from 51.2 in June, pointing to expansion for the 19th straight month


Caixin/S&P Global services purchasing managers’ index (PMI) rose to 52.1 from 51.2 in June, pointing to expansion for the 19th straight month.


China economy