The S&P Global PMI composite index for China fell sharply to 51.2 in July from 52.8 in June, indicating that conditions in the Chinese economy have weakened for the second consecutive month. The business activity index for China's services sector, also published today, rose from 51.2 to 52.1, while the previously published headline index for the manufacturing PMI survey fell from 51.8 in June to 49.8 in July. Official PMI survey data published last week showed further contraction in manufacturing and weaker growth in the non-manufacturing sector in July.

Respondents to today's service sector survey reported weaker growth in output and new export orders but stronger growth in new orders and payrolls in July. The survey's measure of confidence rose slightly after falling last month to its lowest level since June 2020 but remains weak. Respondents also reported steady growth in input costs and no change in selling prices.

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.