The S&P Global PMI composite index for China fell slightly from 52.6 in December to 52.5 in January, indicating that China's economy retained some momentum at the start of the year. The business activity index for China's services sector, also published today, fell slightly from 52.9 to 52.7, while the previously-published headline index for the manufacturing PMI survey was unchanged at 50.8 in January.

Official PMI survey data published last week showed further contraction in manufacturing and weaker growth in the non-manufacturing sector in January. Together, these PMI surveys suggest that China's economy remains impacted by weakness in the property market despite recent measures aimed at improving liquidity conditions. This may strengthen the case for policy adjustments, with the annual National People's Congress due to take place in early March.

Respondents to January's service sector survey reported weaker growth in output, new orders, and new export orders in January. Payrolls were reported to have risen for the second consecutive month while the survey's measure of confidence remained solid but moderated to a three-month low. Respondents also reported weaker growth in input costs and the first cut in selling prices since April 2022.

Today's data were below the consensus forecast of 53.0 for the service sector survey's headline index. The China RPI and the RPI-P both fell from minus 14 to minus 21, indicating that recent Chinese data in sum are coming in below consensus forecasts.

S&P's services PMI in January is expected to come in little changed at 53.0 versus December's 52.9 and November's 51.5.

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.