Activity in China’s services sector expanded at a faster pace in December, boosted by accelerated growth in demand,

Services PMI 52.2 in December 2024

• • Growth of activity: Driven by stronger domestic demand and promotional efforts, new business inflows grew at the fastest pace in five months.
  • Challenges: Export jobs fell for the first time since August 2023, and employment fell amid concerns about costs and resignations.
  • Backlogs and costs: Overtime increased and cost pressures intensified due to rising input and wage costs. Sales prices rose for the first time in six months.
  • Outlook: Despite positive sentiment supported by government policy, business confidence fell to its lowest level since March 2020, amid concerns over competition and weak international trade.

The sector shows steady growth, but faces the challenges of global trade and rising costs.

***

Making the data a bit of a mixed bag, Composite declined.

Composite 51.4

• • Growth trends: Service activity accelerated, but weaker manufacturing slowed overall growth to the lowest level since September.
  • New Orders: Growth has slowed due to a renewed decline in exports.
  • Employment: Both sectors fell for the first time since June, reflecting reduced optimism in the private sector.
  • Prices: Selling prices fell for the first time in three months, supported by lower commodity prices and easing cost inflation.

While the economy continues to grow, momentum has slowed, weighed down by weaker output, declining exports and cautious business sentiment.