China Services Activity Returns to Contraction

China’s official NBS Non-Manufacturing PMI rose to 50.1 in May 2026 from 49.4 in the prior month, beating market expectations of 49.5 and returning to expansion territory. The improvement was driven by stronger activity in both the services and construction sectors, amid ongoing policy support and infrastructure-related projects. Demand conditions stabilized, with new orders falling at a slower pace (45.0 vs 44.3 in April), and new export orders improving but remaining in contraction territory (48.1 vs 47.3). Employment stayed weak despite a slight uptick (45.6 vs 45.5), reflecting continued caution among businesses. On the price front, input cost inflation accelerated (52.2 vs 51.7), suggesting higher operating expenses, while a decline in selling prices eased (48.8 vs 48.1), indicating easing deflationary pressures. Lastly, confidence was broadly unchanged from April but remained at its highest level in three months, highlighting cautious optimism about the near-term outlook.

China’s official NBS Non-Manufacturing PMI fell to 49.4 in April 2026 from 50.1 in March, worse than the expected 49.9, signaling a renewed contraction in the services-led sector. The weakness was broad-based across subcomponents, with the business activity index declining for both construction (48.0 vs 49.3 in March) and services (49.6 vs 50.2), as sentiment weakened across most industries, although transport and telecom-related services remained relatively strong. New orders also continued to contract (44.3 vs 45.0), pointing to subdued domestic demand, while employment improved (45.5 vs 45.2) but remained in contraction, reflecting ongoing labor market softness. On prices, input costs edged down slightly (51.7 vs 52.3), while sales prices fell more sharply (48.1 vs 49.9). Meanwhile, business activity expectations strengthened to 54.7 from 54.2, suggesting firms remain cautiously optimistic about future demand despite current weakness.

China’s official NBS Non-Manufacturing PMI rose to 50.1 in March 2026 from 49.5 in the previous month, beating market expectations of 49.9. The latest reading signals a stabilization in the services sector after two consecutive months of contraction. Breaking down the components, the services activity subindex improved (50.2 vs 49.7 in February), while the construction subindex also rose (49.3 vs 48.2), though it continued to reflect stress in China’s struggling property sector. Total new orders continued to decline (45.0 vs 45.2), but the drop was partially offset by an increase in export orders (48.8 vs 44.7). Meanwhile, employment fell further (45.2 vs 46.0), highlighting ongoing labor market slack, whereas supplier delivery times lengthened (51.5 vs 50.5). On prices, input costs climbed (52.3 vs 50.9), while sales prices also went up (49.9 vs 48.8). Lastly, business activity expectations softened (54.2 vs 55.0), but enterprises remain optimistic about market development.