China's June RatingDog Services PMI fell to 54.1, with slower but still elevated expansion

Overview

This report tracks the performance of China's unofficial services PMI in June. It states that the RatingDog China Services PMI fell from 54.4 in May to 54.1 in June, remaining in expansion territory but showing a slower pace of expansion. The reading was above both Goldman Sachs' forecast and the Bloomberg consensus expectation, indicating that resilience in the services sector remains intact.

Core views

The core view is that China's services activity continued to expand in June, but momentum slowed marginally from May. Demand remained supported, with surveyed firms attributing new order growth to stronger customer demand, business expansion, acquisition of new clients, and the launch of new projects. On the pricing side, input costs continued to rise, but output prices rebounded, as service providers raised charges supported by expanding new business, helping improve revenue and profits.

Analysis framework

The report mainly compares the June and May readings of the RatingDog China Services PMI and its sub-indices, and combines Goldman Sachs forecasts, Bloomberg consensus expectations, and trends in the NBS services PMI to make a short-cycle macro assessment of services-sector conditions, demand, employment, external demand, and price pressures.

Methodology notes

• Macro activity trackingPMI expansion-contraction framework

  A PMI reading of 50 is the expansion-contraction threshold; above 50 generally indicates expanding activity, while below 50 generally indicates contracting activity.

  The June services PMI was 54.1, still clearly above 50, indicating that the services sector continued to expand; however, it declined from 54.4 in May, indicating that the pace of expansion slowed.

• Sub-index momentum analysisBreakdown of new orders, employment, and price sub-indices

  Sub-indices such as new business, outstanding business, employment, new export orders, input prices, and output prices are used to assess demand, capacity, cost, and margin pressure.

  New business and outstanding business softened slightly, indicating a marginal slowdown in demand expansion; employment and new export orders increased, indicating improvements in hiring and external demand; input prices fell while output prices rose back into expansion territory, suggesting some easing in margin pressure.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China macroeconomy

  The services PMI is an important high-frequency indicator for observing non-manufacturing demand and economic momentum.

  Strengths

  The PMI remained in expansion territory at 54.1 and exceeded both forecasts and consensus expectations, indicating resilient services activity.

  Weaknesses

  The headline index and new business index both declined from May, indicating a marginal slowdown in the pace of expansion.

  Comparison

  The report notes that the RatingDog services PMI declined in June, while the NBS services PMI rose slightly, showing divergence between the two measures.

  Risks

  If new orders continue to decline, expansion in the services sector could slow further.

• China services sector

  The report directly covers the services PMI and its demand, employment, export order, and price sub-indices.

  Strengths

  Employment, new export orders, and output prices improved, indicating stronger external demand, hiring, and pricing power.

  Weaknesses

  The new business and outstanding business sub-indices declined, indicating weaker marginal momentum in demand expansion.

  Comparison

  The June services PMI was lower than in May, but still above the 50 expansion-contraction threshold and market expectations.

  Risks

  Costs are still rising, with the input price index remaining above 50; if the improvement in output prices proves unsustainable, margin pressure could rise again.

Key data

• RatingDog China Services PMI54.1June reading, down from 54.4 in May.
• Goldman Sachs forecast52.9June forecast for the S&P Global services PMI.
• Bloomberg consensus expectation53.0Market consensus expectation for the June S&P Global services PMI.
• New business index53.1June reading, down from 53.3 in May.
• Outstanding business index51.6June reading, down from 51.8 in May.
• Employment sub-index51.1June reading, up from 50.4 in May.
• New export orders sub-index52.9June reading, up from 51.5 in May.
• Input price sub-index51.5June reading, down from 52.0 in May.
• Output price sub-index51.1Rose from 49.9 in May to 51.1 in June, the highest since May 2024.

Impact & implications

The data is mildly positive for the short-term macro growth outlook in China: the services sector remains in expansion, and the reading exceeded expectations, helping support resilience in economic activity. However, declines in the headline index and new business index suggest that momentum is not continuing to accelerate. Improvement in the price sub-indices may indicate some relief in profit pressure for service companies; if output prices remain in expansion going forward, this would help improve nominal revenue performance in the services sector.

Risks

• Although the services PMI remains in expansion territory, the headline index fell from 54.4 to 54.1, indicating slowing growth momentum.
• Both the new business index and outstanding business index declined from May; if the declines continue, they may weaken services-sector conditions.
• The input price index remains above 50, indicating that cost pressure has not disappeared.
• The report is based on monthly survey data, and subsequent readings may be affected by seasonality, sample composition, and short-term sentiment.

What to watch

• Whether the RatingDog services PMI continues to remain above 50.
• Whether the new business index stabilizes or declines further.
• Whether the improvement in new export orders is sustainable.
• Whether the output price index can remain in expansion territory and continue to ease margin pressure.
• The divergence in trends between the NBS services PMI and the RatingDog services PMI.