[BEIJING] China’s services activity grew in September but at a slightly slower pace, a private survey showed on Tuesday, with job losses weighing on the sector despite strong domestic and overseas demand.
The RatingDog China General Services PMI, compiled by S&P Global, slipped to 52.9 in September from 53.0 in August, staying above the 50-mark that separates growth from contraction.
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.
New business growth slowed marginally in September from August, but new export orders rose at the fastest pace in seven months, helped by a recovery in tourism.
However, employment fell at the fastest pace in 17 months, as firms faced rising costs and reduced capacity pressures.
Input costs rose at a marginally faster rate, driven by wages and raw materials, prompting firms to lift output charges in September after cutting them in August.
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“Profit margins in the services sector remained under pressure, while this trend has not yet seen a fundamental improvement,” said Yao Yu, founder of RatingDog.
“From a short-term perspective, the compression of profit margins has not yet significantly weighed on the headline PMI reading. We expect the services PMI to continue to expand in the near term,” Yao added.
China’s broader economy has struggled to regain momentum amid a prolonged property slump, weak household confidence and soft private investment.
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While Beijing has unveiled steps to bolster consumption and stabilise prices amid fierce price cutting among retailers, a solid recovery in demand remains elusive. Factory output and retail sales in August recorded their weakest gains since last year.
Despite cautious policymaking aimed at balancing economic support with concerns over overheating financial markets, business confidence surged to its highest since March.
Firms expressed hope that stronger market conditions and expansion plans would support sales and activity in the year ahead.
The Composite Output Index rose to 52.5 from 51.9, the fastest pace since June 2024, driven by services. REUTERS
