The RatingDog China General Services PMI, compiled by S&P Global, rose to 53.0 in August from 52.6 in July, the highest since May 2024. — Bloomberg
BEIJING: China's services activity expanded at the quickest pace in 15 months in August, buoyed by firmer demand at home and a rebound in foreign orders, a private-sector survey showed on Wednesday.
The RatingDog China General Services PMI, compiled by S&P Global, rose to 53.0 in August from 52.6 in July, the highest since May 2024. The 50-point mark separates expansion from contraction.
The uptick was broadly consistent with the official services PMI, which inched up to 50.5 from 50.0 in July.
RatingDog's index is viewed as a better gauge of smaller, export-oriented service providers along China's east coast, while the official PMI primarily tracks large and medium-sized enterprises, including state-owned companies.
China's economy has been struggling to regain momentum amid a protracted property slump, weak household confidence and soft private investment. Beijing has introduced measures to bolster domestic consumption and curb price wars, but these efforts are yet to produce significant results.
Services have been a relative bright spot compared with manufacturing, underpinned by travel, but margins remain thin as firms face rising costs and price competition.
"While this short-term boost is positive for business activity, the ongoing pressure on corporate profits could create negative feedback in the long term," said Yao Yu, Founder at RatingDog.
"Whether prices can be effectively passed on and if there are signs of improving domestic demand will be crucial for assessing the likelihood of a sustained economic recovery," said Yao.
The Composite PMI, covering both manufacturing and services, rose to 51.9 in August from 50.8 the previous month, the fastest pace since November, with growth led by services.
The survey showed new business increased at the fastest pace since May 2024, lifted by improving market sentiment and a rebound in overseas demand. The new export orders sub-index rose at the quickest pace since February, helped in part by stronger tourism flows.
The rise in new orders drove a quicker build-up of outstanding work.
A trade truce between China and the United States also has helped ease tensions between the two economic powers with exports beating forecasts in July.
Despite the demand improvement, service providers cut staffing in August after adding jobs in July, citing non-replacement of departures, redundancies and cost concerns.
Input costs continued to rise, though at a slightly slower rate, driven by higher wages and raw material prices. In a competitive market, firms absorbed much of the cost pressure and trimmed output charges to support sales, reversing July's one-off price increase, the only rise since January.
With new business and activity on the rise, overall business confidence improved. - Reuters
