China's services sector saw increased growth in July, driven by new orders, according to a private survey. However, overseas demand slowed to its lowest level in 11 months. The Caixin/S&P Global services purchasing managers' index (PMI) increased to 52.1 in July from 51.2 in June, indicating expansion for the 19th consecutive month. The index focuses on private and export-oriented companies, with a 50-mark dividing expansion from contraction. While domestic demand remained strong, the survey revealed a slowdown in new export orders, with the weakest growth since August 2023. This suggests that weakening global economic conditions are impacting China's export-oriented service sector. The official services PMI indicated a slowdown in the sector in July compared to June, with retail sales, capital market services, and real estate services all contracting. China's economy grew below expectations in the second quarter, facing deflationary pressures and a prolonged property downturn, with retail sales growth in June at its slowest since early 2023. The Caixin/S&P survey reported an increase in the new orders sub-index to 53.3 in July from 52.1 in June, while overseas demand showed its weakest expansion since August 2023. Service providers faced challenges with rising costs for raw materials, wages, and freight, while employment increased at the quickest rate in 11 months. The Caixin/S&P composite PMI, monitoring services and manufacturing, decreased from June but stayed in expansion mode. "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. Attribution: Reuters Download
