China’s Services Sector Shows Growth in July

Investing.com– China’s services sector grew slightly more than expected in July, according to private purchasing managers index (PMI) data released on Monday, signaling that some parts of the economy remained strong despite a manufacturing slowdown.

The Caixin Services PMI rose to 52.1 in July from 51.2 in June, surpassing expectations of 51.4. A reading above 50 indicates expansion, with the index now marking growth for the 19th consecutive month.

The strength in the services sector was primarily driven by steady onshore and offshore demand, alongside a resurgence in tourism that bolstered the sector.

However, the reading also indicated that an external demand indicator hit its lowest mark in 11 months, pointing to overall weak demand conditions.

This services PMI report contrasts with Caixin and government PMIs for manufacturing released last week, which suggested a contraction in that sector.

While demand for services has provided some resilience to China’s economy, it remains limited due to ongoing challenges in the manufacturing sector.

In response, Beijing has implemented a series of looser monetary policies to stimulate demand and increase inflation, though these measures have had limited effectiveness, leaving investors seeking further support.

Ultimately, the services sector has contributed only a modest amount of strength, as manufacturing and industrial production are critical for China’s economic engine. The economy’s growth for the second quarter fell short of expectations, as reported in July.