The S&P Global PMI composite index for China fell from 51.9 in July to 51.7 in August, indicating that China's economy expanded for the eighth consecutive month but at the slowest pace since January. The business activity index for China's services sector, also published today, fell more sharply from 54.1 in July to 51.8 in August, while the manufacturing PMI survey, released last week, showed an increase in its headline index from 49.2 to 51.0. Official CFLP PMI survey data also released last week showed ongoing contraction in the manufacturing sector and weaker growth in the non-manufacturing sector in August.

Respondents to today's service sector survey reported smaller increases in output and new orders in August and the first decline in new export orders since December 2022. Payrolls were again reported to have been increased at a modest pace while the survey's measure of confidence fell to a nine-month low. Respondents also reported weaker growth in both input costs and selling prices.

Today's data were below the consensus forecast of 53.7 for the service sector's headline index. The China ECDI fell from minus 14 to minus 21 and the ECDI-P fell from minus 20 to minus 33, indicating that recent Chinese data in sum are coming in below consensus forecasts.

S&P's services PMI in August is expected to slow slightly to 53.7 versus July's 54.1 which was slightly better than expected.

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.