China’s services activity expanded slightly faster in October at 50.4 versus 50.2 last month but below the estimate of 51.2,
Sales in the services sector grew at the softest rate in 10 months, and employment remained stagnant, while business confidence decreased.
The services sector accounts for approximately 48% of jobs in China.
The Caixin/S&P Global services purchasing managers’ index (PMI) increased to 50.4 in October, up from September’s nine-month low of 50.2. However, the pace of expansion was slower than in the first half of the year.
A reading above 50 indicates expansion, while below 50 indicates contraction.
The official survey also showed a drop in services PMI from 50.9 in September to 50.1.
New orders in the services sector grew at the weakest pace in 10 months, partly offset by a boost from increased travel during the National Day holiday.
Foreign demand for Chinese services improved, but the slowdown in sales growth led to cautious hiring practices. Employment in the sector remained unchanged in October.
Business optimism declined for the fourth consecutive month and was at its lowest level since March 2020.
Prices charged by services companies increased as they tried to pass on higher input costs to customers, although the rate of input inflation slowed down.
The composite PMI, which includes both manufacturing and services, declined to 50.0 from 50.9 in September, the lowest reading since December 2022.
Concerns exist about the weak property sector, declining travel demand, local government debt, and geopolitical tensions affecting China’s economic outlook, despite better-than-expected growth in the third quarter.