China Services Sector Remains in Contraction

China's official NBS Non-Manufacturing PMI held at 49.0 in August 2026, unchanged from July and below expectations of 49.5, pointing to a continued contraction in non-manufacturing activity. The business activity index was unchanged at 49.3, while the construction index edged down to 46.9 from 47.0. Within services, wholesale, retail, and capital market services remained below the 50.0 threshold, while postal services, telecommunications, broadcasting, television and satellite transmission services, and internet software and IT services remained strong. Meanwhile, the new orders index fell to 44.1 from 44.4, indicating weaker market demand, with construction orders rising to 42.4 from 40.1 and services orders declining to 44.5 from 45.2. On prices, input costs rose to 51.1 from 49.7, while sales prices increased to 49.3 from 47.9. Employment was unchanged at 45.4, while business expectations eased to 55.0 from 55.4, indicating firms remained optimistic about future activity.

China's official NBS Non-Manufacturing PMI fell to 49.0 in July 2026 from 50.2 in June, pointing to a renewed contraction after two months of modest expansion and defying expectations of a flat reading. The business activity index for the services sector declined to 49.3 from 50.4, while the construction index dropped to 47.0 from 49.0. Within services, postal services, telecommunications, broadcasting, and culture and entertainment remained strong, with business activity indices above 55.0, while capital market services and real estate remained in contraction. Meanwhile, the new orders index fell to 44.4 from 48.0, with construction declining to 40.1 from 46.3 and services easing to 45.2 from 48.4. On prices, input costs were unchanged at 49.7, while sales prices slipped to 47.9 from 48.4. Employment also edged down to 45.4 from 45.8. Still, business expectations improved slightly to 55.4 from 55.3, indicating firms remained optimistic about future activity.

China’s official NBS Non-Manufacturing PMI rose to 50.2 in June 2026 from 50.1 in May, defying expectations of a slight contraction to 49.9. The business activity index for the services sector rose by 0.1 percentage point to 50.4, supported by strong activity in telecommunications, internet software and IT services, financial services, and insurance, all above 55. In contrast, the business activity indices for air transport and real estate remained below 50. Meanwhile, the construction index also improved to 49, 0.2 percentage points higher than in May. In terms of new orders, the index improved to 48 from 45. By industry, the new orders index for the construction sector was 46.3 (+2.8 pp), while the service sector came at 48.4 (+3.1 pp). On prices, input prices fell to 49.7 from 52.2, suggesting easing price pressures, while sales prices fell to 48.4 from 48.8. Employment also edged up to 45.8 from 45.6. Lastly, business expectations rose to 55.3 from 54.8, showing improved sentiment.