China’s services activity grew at its slowest pace in eight months. Confidence also hit a four-year low in June, dragged down by slower growth in new orders. A private-sector survey showed this on Wednesday, suggesting the need for more economic stimulus.
The Caixin/S&P Global services purchasing managers’ index (PMI) dropped to 51.2 from 54.0 in May. This marked the lowest reading since October 2023 but still indicated expansion for the 18th straight month. The 50-mark separates expansion from contraction.
This survey, which covers mostly private and export-oriented companies, matched a broader official PMI released on Sunday. That report showed activity in the services sector at a five-month low.
The world’s second-largest economy has shown patchy growth in recent months. This reinforces calls for more policy support to achieve an ambitious growth target of around 5%.
The new orders subindex fell to 52.1 in June from 55.4 in May. Overseas demand also eased slightly, despite strong exports in May.
Business confidence fell to its lowest level since March 2020. Concerns about the global economy and rising competition contributed to this decline.
Service providers reduced hiring last month after adding jobs in May.
However, slower rates of inflation for both input and output prices provided some relief. Business owners had been grappling with higher costs for materials, labor, and transport.
The Caixin/S&P’s composite PMI, which tracks both the services and manufacturing sectors, fell to 52.8 from 54.1.
Markets are now focused on a leadership gathering in mid-July, known as the third plenum, which may announce some reforms.
Policy advisers expect measures that redistribute income from central authorities to local governments, reducing their reliance on land sales.
“Fiscal and tax reforms should focus on creating more optimistic expectations among market participants,” said Wang Zhe, senior economist at Caixin Insight Group.
