China’s services sector expanded at its most modest pace since September 2024 during July, according to a private business survey released Wednesday. The RatingDog China General Services Purchasing Managers’ Index, compiled by S&P Global, declined to 50.4 from 54.1 in June. While the figure remains above the 50-point threshold that separates growth from contraction, the trajectory indicates a clear moderation in both overall activity and new business inflows.
The private survey outcome presented a more optimistic picture compared to the official government data, which showed that services activity had actually slipped into contractionary territory during the same month. This divergence underscores the varying methodologies and market sampling used across different tracking instruments.
Within the services category, the pace of new business growth weakened to its slowest level since March. The slowdown is primarily attributed to softer domestic demand, which typically influences revenue visibility and cash conversion cycles. Despite domestic softness, services exports expanded for the third consecutive month. Anecdotal reporting points to heightened overseas client interest in summer exhibitions, educational study tours, financial transaction settlements, and more efficient corporate management practices as the primary drivers.
Employment trends also reflect a measured approach. Firms continued to add staff for a third straight month, though the hiring rate decelerated relative to June. This gradual staffing adjustment suggests organizations are prioritizing operational efficiency and working capital preservation over aggressive expansion.
Corporate confidence remained in positive territory but softened to its lowest reading since February 2020. The decline in sentiment signals increased caution among business leaders, which often precedes adjustments in production schedules, inventory management, and long-term capital deployment.
Broader economic activity, as captured by the Composite Output Index that combines manufacturing and services performance, also cooled. The composite metric fell to 50.8 from 53.6 in June. These indicators collectively point to a sector navigating transitional demand patterns while maintaining a fragile balance between expansion and contraction.