China’s Caixin June Services PMI surprises negatively

China’s Caixin Services PMI came in at 51.6 in June vs 52.8 last and 52.9 expectations.

Summary – Services and Composite PMI data

The Caixin China Composite PMI™ data (which covers both manufacturing and services) pointed to a marginal increase in total Chinese business activity at the end of the second quarter. At 51.1 in June, the Composite Output Index fell from 51.5 in May to signal the slowest rate of expansion in a year.

Latest data indicated that the slowdown in overall growth was driven by a weaker performance of the service sector. The seasonally adjusted Caixin China General Services Business Activity Index posted 51.6, down from a four-month high of 52.8 in May, to signal the second-slowest increase in activity for 13 months (after April 2017). At the same time, manufacturing production growth picked up slightly since May, but remained marginal overall.

Slower growth in services activity coincided with a softer increase in new work in June. Services companies noted the weakest increase in new orders for just over a year, with a number of firms mentioning that subdued market conditions had weighed on client spending.

Meanwhile, new business rose at a slightly quicker (albeit still marginal) pace across the manufacturing sector. At the composite level, new work increased at a modest pace that was the slowest recorded in nine months.

Commenting on the China General Services PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: “The Caixin China General Services Business Activity Index slipped to 51.6 in June from 52.8 in the previous month, hitting the second-lowest level seen for just over a year following a brief rebound in May.”