The S&P Global PMI composite index for China rose from 51.6 in November to 52.6 in December, indicating that China's economy gained some momentum at the end of the year, largely driven by the services sector. The business activity index for China's services sector, also published today, rose from 51.5 to a five-month high of 52.9, while the previously-published manufacturing PMI survey showed a slight increase in its headline index from 50.7 to 50.8, a four-month high.
 
Official PMI survey data published last week showed slightly stronger growth in the manufacturing sector and a slightly bigger contraction in the non-manufacturing sector in December. Together, these PMI surveys suggest that China's economy remains impacted by weakness in the property market but not to an extent that would prompt a significant shift in the policy stance. Officials characterised activity data published last month as evidence that"the national economy further consolidated its good momentum" and that conditions are"turning for the better".
 
Respondents to today's service sector survey reported stronger increases in output, new orders, and new export orders in December. Payrolls were reported to have been increased for the first time in three months and the survey's measure of confidence increased to a three-month high. Respondents also reported stronger growth in input costs but a smaller increase in selling prices.
 
Today's data were well above the consensus forecast of 51.6 for the service sector survey's headline index. The China RPI and the RPI-P rose from minus 21 to minus 7 and from minus 20 to zero respectively, indicating that recent Chinese data in sum are coming in close to consensus forecasts.

S&P's services PMI in December is expected to improve to 51.6 versus November's 51.5 and October's 50.4.

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.