The S&P Global PMI composite index for China fell from 50.9 in September to 50.0 in October, indicating that China's economy stalled after nine consecutive months of steadily weakening expansion. The business activity index for China's services sector, also published today, rose from 50.2 to 50.4, while the manufacturing PMI survey, released earlier in the week, showed a fall in its headline index from 50.6 to 49.5.

Official PMI survey data published earlier in the week also showed weaker growth in the Chinese economy in October. Together, these PMI surveys indicate that momentum in the Chinese economy's recovery has stalled again despite recent steps to loosen policy and improve liquidity conditions. This may strengthen the case for further policy adjustments in coming weeks.

Respondents to today's service sector survey reported a steady increase in output and weaker growth in new orders in October but an increase in new export orders. Payrolls were reported to have been held steady but the survey's measure of confidence fell to its lowest level since early 2020. Respondents also reported weaker growth in input costs but a bigger increase in selling prices.

Today's data were just below the consensus forecast of 50.5 for the service sector survey's headline index. The China RPI and the RPI-P both fell from plus 7 to minus 14, indicating that recent Chinese data in sum are coming in below consensus forecasts.

S&P's services PMI in October is expected to edge higher to 50.5 versus September's 50.2 which was nearly 2 points lower 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.