Chinese Services Sector Shows Resilience Despite Slight Slowdown
Vexoda Newsroom
China's service sector maintained robust growth despite a slight deceleration in June, with export orders reaching a 20-month high and pricing power returning to firms. This signals potential improvem
In June, China’s services sector showed resilience as the General Services PMI eased slightly from 54.4 to 54.1, still indicating strong growth near a three-year high. The easing was driven by an acceleration in export orders reaching their highest level since October 2024 and firms regaining pricing power after four months of decline.
The improvement in external demand is notable as services exports grew for the second consecutive month at the fastest pace seen since October 2024, reflecting a broader trend of strengthening overseas business. Meanwhile, domestic new business growth decelerated slightly but remained positive, with outstanding business rising for an eighth straight month.
Employment also showed back-to-back gains in June, marking the first such increase since early 2024 and indicating sustained economic health. However, while these trends are encouraging, RatingDog founder Yao Yu cautions that a single data point is not yet conclusive of broader labor market improvements.
Service providers reported raising their charges for the first time in four months at the strongest rate since May 2023, driven by higher input costs and business expansion. Despite this increase, overall cost pressures eased as input price inflation moderated from its recent peak. Selling prices also rose strongly, indicating a return to growth after a period of deflationary concerns.
The composite PMI Output Index for both manufacturing and services fell slightly but remained at one of the fastest rates of expansion in three years. This suggests that while there are signs of improvement, China’s economy continues to balance domestic and external drivers with steady growth. Yao Yu is optimistic about near-term prospects, citing sustained export business, employment gains, and rising selling prices.
Traders should monitor these trends closely as they could impact various assets including the yuan (CNY) and related commodities such as copper, which are heavily influenced by China’s economic health. The return of pricing power and increased export orders also have implications for global trade dynamics.
Source: InvestingLive. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.