China’s Caixin Services PMI eases in July, misses expectations

China’s Caixin May Services PMI came in at 51.5 in July vs 51.6 last and 51.9 expectations.

Summary – Services and Composite PMI data

The Caixin China Composite PMI™ data (which covers both manufacturing and services) signalled an improvement in the rate of Chinese business activity growth at the start of the third quarter. This was shown by the Composite Output Index rising from June’s recent low of 51.1 to a four-month high of 51.9 in July.

The stronger increase in total business activity was supported by a sustained upturn in manufacturing production, which in turn increased at the quickest rate in five months in July. In contrast, service sector activity expanded at a modest pace that was the joint-weakest since May 2016 (on par with April 2017). This was shown by the seasonally adjusted Caixin China General Services Business Activity Index posting 51.5, down fractionally from 51.6 in June.

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 fell 0.1 point from the previous month to 51.5 in July, on par with April's reading that marked the weakest pace of expansion since May 2016. The index of new business edged down and the input costs index fell to its lowest level for nearly a year, while prices charged rose marginally. The Composite Output Index came in at 51.9, up 0.8 points from a month ago and the highest figure since March. China’s economic performance in July was stronger than expected, mainly due to sustained recovery in the manufacturing sector. However, downward pressure on the economy likely remains as the index gauging companies’ confidence towards the 12-month business outlook dropped in both the manufacturing and services industries.”