China services PMI rises to 51.6 in September as new orders strengthen

China’s services sector gained momentum in September as stronger new orders and overseas demand helped lift business activity, although falling prices pointed to continued pressure on firms.

The RatingDog China General Services Purchasing Managers’ Index rose to 51.6 in September from 51.4 in August, according to a private sector survey released on Wednesday. A reading above 50 indicates growth, while a reading below 50 signals contraction.

The September reading marked the fastest expansion in China’s services activity in three months.

New business grew at its fastest pace since June, supported by improving demand and efforts by companies to expand their client base. New export orders also increased at a faster pace than in August, suggesting stronger overseas demand.

Employment in the services sector increased for a fifth consecutive month as companies added staff to deal with heavier workloads.

However, the pace of hiring slowed to a four-month low.

Price trends remained a concern for services companies. Input costs rose at a slower pace than in August, but output prices fell for the first time in four months.

The decline in output prices was the sharpest since April 2022. This suggests that companies continued to face pressure to keep prices competitive even as business activity improved.

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Business confidence also strengthened in September. Companies pointed to expectations of firmer market conditions, expansion plans and new project wins as reasons for a more positive outlook.

The improvement in services activity also lifted the broader private sector reading.

The RatingDog China General Composite PMI, which covers both manufacturing and services, rose to 52.4 in September from 52.1 in August.

The services sector has become an important part of China’s economy, making its performance a closely watched indicator of domestic and external demand.

(With inputs from agencies.)