China services PMI shows surprise rebound

China’s services sector activity strengthened in August, according to the private-sector RatingDog China General Services PMI. The index rose to 51.4 in August from 50.4 in July, remaining above the 50 level that separates expansion from contraction. The August reading also exceeded forecasts of 50.6, pointing to a quicker pace of growth than expected in the services economy.

Alongside the services measure, the RatingDog China Composite PMI, which combines both manufacturing and services, increased to 52.1 in August from 50.8 in July. This suggests that overall private-sector activity expanded at a faster rate, with services playing a key role in lifting the composite gauge.

New business in the RatingDog services survey rose for the 44th consecutive month in August. The pace of new orders growth picked up from July’s four-month low, indicating firmer demand conditions. This sustained run of rising new business underscores continued client demand within the services sector.

Employment in services also improved, with job creation recorded for a fourth straight month. This marks the longest continuous period of services employment growth since 2023 in the RatingDog series. The ongoing rise in staffing levels signals that firms continued to add workers in response to activity and demand.

Cost and price indicators showed only modest pressures. Input prices in the services sector increased for an 18th consecutive month, while output charges rose for a third month in a row. Both input cost and selling price gains were described as marginal, pointing to relatively mild inflationary pressure within the surveyed firms.

The private RatingDog readings contrasted with the latest official data. The National Bureau of Statistics non-manufacturing PMI stood at 49.0 in August, below the 50 threshold that indicates expansion. Within that, the official services reading was reported at 49.3, also signaling contraction territory by that measure.

This divergence highlights differing signals between private-sector and official surveys of China’s services and broader non-manufacturing activity. While the RatingDog indices showed expansion and improving momentum in August, the official gauges suggested that conditions in non-manufacturing and services remained subdued. Together, the figures present a mixed picture of China’s service-led activity at the start of late summer.