In June, Caixin Services PMI fell to 50.6, below the expected 50.9, hitting the lowest level since October 2024.
According to data released by Caixin on Thursday, June saw the General Services Business Activity Index (Services PMI) at 50.6, a 0.5 percentage point decrease from May, with business sentiment falling to its lowest level since the fourth quarter of 2024.
Breaking it down, momentum in the service industry weakened, with the growth rate of new business slowing down, mainly attributed to the dissipation of holiday effects such as the May Day and Dragon Boat Festival holidays. The deterioration of overseas markets and reduced travel activities led to a contraction in new export orders in June, marking the most significant decline since December 2022.
Commenting on this, Wang Zhe, a senior economist at Caixin Insight, remarked that the external environment has a greater impact on service industry exports.
The employment index dropped slightly below the 50 mark, with surveyed companies generally attributing this to the slowdown in new order growth and cost considerations. While the rate of contraction in employment was slight, it resulted in an increase in unfinished business volume in June, reaching the most significant backlog rate in a year.
In terms of prices, average input costs continued to rise in June, primarily due to increases in raw materials and fuel costs. Service sector businesses continued to absorb the cost increases in June and reduced selling prices for the fifth consecutive month. Fierce market competition has led to a recent sharp decline in service sector selling prices, marking the most significant drop since April 2022.
Furthermore, there is a clear industry differentiation, with monopolistic service sectors such as telecommunications and finance (banks, insurance) having PMIs exceeding 60. Competitive service sectors like retail, transportation, accommodation, and catering are experiencing a slump in PMI (some below 42).
The previously released Manufacturing PMI by the National Bureau of Statistics of China for June stood at 49.7, a 0.2 percentage point increase from the previous month, marking three consecutive months in the contraction zone, with the Services Business Activity Index dropping 0.1 percentage points to 50.1.
Caixin PMI is considered to be more reflective of trends among export-oriented enterprises and small businesses.