China's RatingDog services PMI fell to 50.4 in July, maintaining expansion for 43 consecutive months, and employment and new export businesses all increased for three consecutive months

华尔街见闻08-05 10:04

China's service industry continued to grow in July, but the expansion momentum weakened significantly. Employment expanded for the third consecutive month, and new export businesses remained resilient, although market confidence slipped to the lowest level in more than six years.

On Aug. 5, China's general services business activity index plunged to 50.4 in July from 54.1 in June, the lowest reading since September 2024, according to RatingDog's latest PMI survey data,Services expansion slows for second straight month。

Meanwhile, the composite output index fell to 50.8 from 53.6 in June, the slowest pace of growth in nearly a year.

Although the overall growth momentum tends to converge,Employment expanded for the third consecutive month, new export businesses remained resilient, and input cost gains continued to declineThis has provided some positive support for the current boom picture of the service industry. Yao Yu, founder of RatingDog, said,The service PMI is expected to remain above the boom-bust line in the short term, but the pace of recovery will depend on the intensity of domestic demand and the trend of corporate confidence.

Activity and new business expansion both slowed down

The reading of the service business activity index of 50.4 in July,It means that the output of the service industry has maintained growth for 43 consecutive months,However, the expansion rate that month was the slowest in nearly a year. Total new business volume also maintained growth, extending the continuous expansion record of more than three and a half years, but the growth rate fell to a four-month low.

Yao Yu pointed out that the driving forces driving the growth of commercial activities include customer expansion, project acquisition, business development, and the growth of AI-related services.

Comprehensive PMI data shows that new business has grown for the 14th consecutive month in July, but the growth rate is the slowest since March this year, and both manufacturing and service industries have declined.

Export business maintains resilience and becomes a relatively bright spot

Under the background of domestic demand pressure,The performance of service exports was relatively solid.In July, the new service export business expanded for the third consecutive month and maintained a relatively rapid growth rate. The relevant index recorded 52.0, the second highest reading this year.

The survey data shows that the increase in overseas customer demand is related to the increase in exhibition activities, study tours, settlement business and effective customer management. Yao Yu said overseas demand resilience was one of the few positive signals in July's services data.

Employment rises for three straight months, longest expansion sequence since second half of 2024

Despite the slowdown in overall business expansion, the scale of employment in the service industry continued to expand.Employment recorded third straight month of growth in July, the longest streak of expansion since the second half of 2024The reasons for the increase include the expansion of business scale, the increase in project workload and the commencement of new business lines.

The continuous employment growth has also digested the increase of backlog business to a certain extent, and the growth rate of backlog of uncompleted business slowed down in July. However, the backlog has risen for the ninth consecutive month, the longest sequential growth sequence since 2023, reflecting overall demand that remains supportive.

Under the comprehensive PMI caliber,Employment similarly expanded for a third straight month, the longest streak of growth since mid-2023.

Cost pressures continue to fall, selling prices are slightly increased

In July, the cost pressure of the service industry continued to ease. While input costs have risen for 17 consecutive months, the rate of inflation has cooled further, falling back to its lowest level since January 2026 — and well below the nearly 19-month high set in May.Increased prices of raw materials, labour, advertising and diesel fuel were the major cost drivers.

While the cost increase has slowed down, service providers still choose to raise their charges, raising prices for the second consecutive month, the first consecutive price increase in a year and a half. The reasons for the price increase were attributed to the transmission of cost pressure, rising operating expenses, fluctuations in oil prices and adjustments in insurance rates.

Under the comprehensive PMI caliber,Input price and output price inflation both fell to six-month lows.

In addition, in terms of outlook expectations, although the overall confidence of the service industry in the next 12 months in July was still in a positive range, the optimism degree dropped to the lowest level since February 2020.

Companies are looking forward to business expansion plans, improved market conditions, new product launches, promotional activities and infrastructure projects, but some have taken a more cautious approach to the economic outlook.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment

No comments yet

To The Moon