China Services Sector Unexpectedly Shrinks

China’s official NBS Non-Manufacturing PMI fell to 49.7 in October 2026 from September’s three-month high of 50.2, missing market expectations of 50.5 and indicating a contraction in services activity for the sixth time so far this year. By sector, activity weakened in both construction and services, partly reflecting the seasonal impact of the Golden Week break. New orders (44.4 vs 46.5 in September) and export sales (46.5 vs 48.5) contracted at a steeper pace, while employment remained weak (46.0 vs 45.9). On the cost front, input prices continued to rise for a third consecutive month, although at a slower pace (51.5 vs 52.5). Meanwhile, selling prices returned to contraction after a brief increase in September (49.5 vs 50.3). Looking ahead, business confidence eased to an eight-month low (50.7 vs 51.3).

China's official NBS Non-Manufacturing PMI rose to 50.2 in September 2026 from 49 in each of the previous two months, beating market expectations of 49.3. The latest reading signals a return to growth in the non-manufacturing sector, with both construction activity (50.3 vs 46.9 in August) and services activity (50.2 vs 49.3) moving into expansion. Within the services sector, indices for telecommunications, broadcasting, television and satellite transmission services, monetary and financial services, and insurance were all above 55, while indices for capital market services and real estate remained below the 50 threshold. Among the main components, new orders went up (46.5 vs 44.1), reflecting increases in both the construction and services sectors. On the price front, both input prices (52.5 vs 51.1) and sales prices (50.3 vs 49.3) increased. Employment rose slightly (45.9 vs 45.4), while business expectations also improved (55.5 vs 55.0).

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.