Thanks to increased inflows of new business and continued growth in export business, the expansion of China's service economy accelerated in July.

On Monday, August 5, data released by S&P Global showed that China's Caixin composite PMI for July was 51.2, the previous value was 52.8. Caixin China's comprehensive services business activity PMI was 52.1 in July, up from 51.2 in June, and has been in the expansion range for 19 consecutive months.

The previously announced Caixin manufacturing PMI of 49.8 for July was below the boom and dry line for the first time since November 2023. The volume of new orders has shrunk, and the output growth rate has declined markedly.

In July, new business growth fueled the growth of service sector activity. This is due to the continuous improvement of basic demand conditions and the expansion of service products.

In China's July Caixin Services PMI sub-index, the new export orders index declined markedly, only slightly above the boom and bust line, the lowest since September 2023.

The employment situation in the service sector improved in July, and the employment index rose to an expansion range, and recorded the highest since September 2023. Employment levels are growing at the fastest rate in almost a year.

With the increase in staffing levels and efficiency, the level of unfinished business of Chinese service companies declined in July.

Price levels are under pressure. The average investment price continued to rise at the beginning of the second half of this year. Higher input materials, wages, and transportation costs are the root causes of the increased cost burden. Additionally, the hotter than usual summer months have also led to increased expenses to cope with the heat of employees.

However, the average sales price remained the same in July. Service providers increase sales prices to reflect higher cost burdens, while other service providers lower sales prices to support sales, both offsetting the impact of prices.

The service sector business expectations index rebounded slightly in the expansion range in July, but it is still the second lowest since April 2020.

Business confidence levels are relatively low, the second-lowest since March 2020. Companies are cautiously optimistic that improved market conditions and business development efforts can support the growth of service activities in the coming year.