Data released by Caixin/S&P Global showed that business activity growth in China's services sector accelerated in July, rebounding from an 8-month low reached in June. The July increase was mainly due to an increase in new orders.
According to the report, the services PMI rose to 52.1 points in July from 51.2 points in June. Economists had expected an increase to 51.4 points. The index remains above the 50-point mark, indicating an expansion of activity in the sector, since July 2023, but the pace of growth remained below the year-to-date average.
The report showed that incoming new business increased at a solid pace in July, supported by sustained improvements in underlying demand conditions and an expansion of services offers. New export orders also rose in July, but recorded the weakest pace in the last 11 months. Meanwhile, employment growth accelerated to a near one-year high, but remained modest overall. The data also indicated a decrease in the level of outstanding business in July. As for the inflationary situation, average input prices continued to rise in July, which was caused by higher input material, wage and transport costs, while average selling prices were unchanged. In July, the gauge for future activity expectations rebounded slightly, and the reading was the second-lowest since March 2020. Companies were cautiously optimistic that improved market conditions and business development efforts could support increased activity in the coming year.