The S&P Global PMI composite index for China fell from 52.5 in June to 51.9 in July, indicating that China's economy expanded for the sixth consecutive month but at the slowest pace since January. The business activity index for China's services sector, also published today, rose moderately from 53.9 in June to 54.1 in July, while the manufacturing PMI survey, released earlier in the week, showed a fall in its headline index from 50.5 to 49.2. Official CFLP PMI survey data also released earlier in the week showed contraction in the manufacturing sector but weaker growth in the non-manufacturing sector in July.

This week's PMI survey data are broadly in line with the assessment of senior Chinese leadership, reported last week, that China's economic recovery is"wave-like" and"tortuous" and continues to face"difficulties and challenges", including insufficient domestic demand and a"severe" external environment. Despite their concerns about the pace of recovery, the report indicated that officials do not currently envisage a need for a major shift in policy settings.

Respondents to today's service sector survey reported bigger increases in output and new orders in July but slower growth in new export orders. Payrolls were reported to have been increased at a modest pace while the survey's measure of confidence fell to an eight-month low. Respondents reported weaker growth in both input costs and selling prices.

Today's data was below the consensus forecast of 52.4 for the headline composite index. Both the China ECDI and the ECDI-P fell from minus 2 to minus 9, still close to the zeroline, indicating that recent Chinese data in sum are coming in near the consensus forecasts.

S&P's services PMI in July is expected to slow to 52.4 versus June's 53.9 which marked a noticeable slowdown from May's 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.