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The
Caixin/S&P Global services purchasing managers' index (PMI) rose
to 52.1 from 51.2 in June, pointing to expansion for the 19th
straight month. The index covers mostly private and
export-oriented companies and the 50-mark separates expansion
from contraction on a monthly basis.
In contrast, the official services PMI showed the sector
stalling in July from growth in June, with retail sales, capital
market services and real estate service industries all
shrinking.
The world's second-biggest economy grew much more slowly than
expected in the second quarter and faces deflationary pressures
and a protracted property slump, with retail sales growth in
June grinding to its weakest pace since early 2023.
The Caixin/S&P survey showed that the new orders sub-index rose
to 53.3 in July from 52.1 in June, while the gauge of overseas
demand showed the smallest expansion since August 2023.
Service providers grappled with growing costs for raw materials,
wages and freight, but employment rose at the fastest pace in 11
months.
The Caixin/S&P's composite PMI, which tracks both the services
and manufacturing sectors, eased from June but remained in
expansionary territory.
"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.
China's leaders last week signalled that fiscal support for the
rest of the year will "focus on consumption", aiming to boost
incomes and social welfare, a shift long advocated by many
economists who say the country's economic model relies too
heavily on investment.
"Without going beyond the reactive and incremental easing mode,
however, the confidence could be still lingering at low levels
in coming months," said economists at Citi in a research note.
"More significant domestic stimulus may only become plausible
next year in the face of potentially stronger external
headwinds," Citi said.
(Reporting by Liangping Gao and Ryan Woo; Editing by Neil
Fullick)
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