The S&P Global PMI composite index for China slumped to a five-month low of 52.5 in June from a 29-month high of 55.6 in May, when it jumped from 53.6 in April, indicating that the economy expanded for the sixth consecutive month but the rate of increase was the slowest since the current period of growth began in January. The slowdown was driven by weaker increases in output across both the manufacturing and service sectors.

The Econoday Consensus Divergence Index stood at minus 64, far below zero, which indicates the Chinese economy is performing much worse than expected. Excluding the impact of inflation, the index was at minus 75.

The S&P Global business activity index for China's services sector plunged to 53.9 in June after rising to 57.1 in May from 56.4 in April. The rate of growth in new orders decelerated to a six-month low but services providers continued to benefit from a revival in tourism and travel since the easing of pandemic restrictions in December.

Looking 12 months ahead, business sentiment in China's services sector showed its first improvement in five months, with many firms foreseeing stronger economic conditions and more new work to support growth.

Employment grew across the sector as companies looked to expand capacity amid the sustained upturn in new business. Though modest, the rate of job creation was the strongest in three months. Input prices rose solidly but prices charged by service providers rose only slightly in June. Some companies are raising their fees to reflect higher costs while others are trying to remain price-competitive.

China's manufacturing PMI survey released Monday showed conditions in the sector remained above the neutral level in June but its headline index slipped to 50.5 after rising to 50.9 in May from 49.5 in April.

Official CFLP PMI survey data released last week indicated factory activity in China contracted for the third straight month in June as the world's second-largest economy struggles to recover from the impact of the pandemic in the face of slower global demand. The non-manufacturing sector remains in growth territory after Beijing lifted its Covid restrictions on economic activity in December but is losing some steam.

S&P's services PMI in June is expected to slow to 55.9 versus May's very solid 57.1.

The S&P China Services PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private service sector companies. The panel has been carefully selected to accurately replicate the true structure of the services economy.

The S&P China Composite PMI is a weighted average of the Manufacturing Output Index and the Services Business Activity Index, and is based on original survey data collected from a representative panel of over 800 companies based in the Chinese manufacturing and service sectors.

The PMIs have developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indexes are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.