China's services sector expanded more slowly in November, with the Caixin/S&P Global Services PMI slipping to 51.5 from 52.0 in October, signaling modest growth above the 50-point threshold. Economists had expected the index to rise to 52.5. This slowdown, driven by weaker new business growth, mirrors the official non-manufacturing PMI, which stagnated at 50.0.
The economy continues to face challenges, including a prolonged property slump, local government debt risks, and weakening global demand. These pressures are compounded by trade uncertainties, with U.S. President-elect Donald Trump proposing tariffs exceeding 60% on Chinese imports.
Despite these challenges, firms showed cautious optimism, adding staff for the third straight month and reporting the highest business confidence in seven months. However, competition led to reduced selling prices, partially offset by declining material costs. The new business sub-index declined to 51.8 from 52.1 in October and the expansion of new business inflows from abroad also slowed.
Wang Zhe, Senior Economist at Caixin Insight Group, noted that while November saw some recovery momentum, structural and external pressures remain significant, which requires sufficient policy buffers.
The data also showed that the Caixin/S&P Global Composite PMI rose to 52.3 from 51.9, buoyed by stronger manufacturing sector expansion. Economists had expected the index to decline to 51.4.