Chinese Business Activity Growth Cools To A Five-Month Low In June  

• The Chinese service sector showed signs of softening growth in June, according to the latest PMI data. Business activity and new orders both expanded at notably slower rates than seen in May, as some firms reported softer-than-expected market demand. Cost pressures meanwhile remained relatively subdued, with input cost inflation remaining below the series trend, while output charges rose only slightly.
• Despite the softer increase in activity, firms added to their staffing levels at the quickest rate for three months. Recruitment in the sector was supported by a more positive outlook for the year ahead, with overall business confidence picking up for the first time in five months in June.
• At 53.9 in June, the seasonally adjusted headline Caixin China General Services Business Activity Index slipped from 57.1 in May to signal a weaker upturn in service sector activity. Though solid, the rate of growth was the softest seen since the current period of expansion began in January.
• The slower rise in business activity was often linked to softer than anticipated demand conditions. Although total new business continued to expand at the end of the second quarter, the rate of growth moderated to a six-month low and was modest overall. The new export business meanwhile expanded solidly, despite the rate of increase edging down to the softest since January. There were several reports that the sector continued to benefit from a revival in tourism and travel since the easing of pandemic restrictions.

(Source: S&P Global)