BEIJING (Reuters) – China’s services activity expanded at the slowest pace in eight months and confidence hit a four-year low in June, dragged down by slower growth in new orders, a private sector survey showed this week. Wednesday, suggesting more economic stimulus is needed. .
The Caixin/S&P Global services purchasing managers’ index (PMI) fell to 51.2 from 54.0 in May, marking the lowest reading since October 2023 but remaining in expansionary territory for the 18th consecutive month. The 50 mark separates expansion from contraction.
The survey, which mainly covers private and export-oriented companies, is in line with a broader official PMI released on Sunday, which showed activity in the services sector hit a five-month low.
The world’s second-largest economy has seen uneven growth in recent months, reinforcing calls for more political support to reach an ambitious growth target of around 5%.
The new orders subindex fell to 52.1 in June from 55.4 the previous month. External demand also decreased slightly, despite strong exports in May.
Business confidence levels have declined to the lowest level since March 2020 due to concerns about the global economy and increased competition.
Service providers cut back on hiring again last month after adding jobs in May.
But slower inflation rates, both for the prices of inputs and products, offered relief to businesspeople struggling with higher costs for raw materials, labor and transport.
The Caixin/S&P composite PMI, which tracks the services and manufacturing sectors, fell from 54.1 to 52.8.
Markets are now focused on a leadership meeting in mid-July, known as the third plenary, which could announce some reforms.
Measures that redistribute income from central authorities to local governments, thus reducing their dependence on land sales, will be at the top of the meeting’s agenda, according to political consultants.
“Tax and taxation reforms should focus on creating more optimistic expectations among market participants,” said Wang Zhe, senior economist at Caixin Insight Group. (This story has been corrected to set the trust threshold at a minimum of four years in paragraph 1)
(Reporting by Liangping Gao and Ryan Woo; Editing by Sam Holmes)
