China's Caixin services purchasing managers' index (PMI), a private gauge of the country's services sector, stood at 51.8 in August, down 2.3 points from the previous month but remaining in expansion territory for the eight straight month this year.
In August, China's service sector expansion moderated slightly, with overseas market demand slumping into the contraction territory for the first time this year, the report noted.
Overseas demand has significantly weakened, impacting export activities. "New export business fell for the first time since December 2022, albeit marginally, amid reports of sluggish overseas market conditions," the report said.
"Nevertheless, companies remained optimistic about the 12-month outlook, and the planned expansions of the companies supported a further increase in employment across the sector," Caixin noted.
Employment situation in services sector remains resilient. Surveyed companies reported growing business demand, coupled with the companies' new investment plans, which together support employment growth.
"Although growth momentum has slowed, companies continued their recruitments during August," read the report.
In the meantime, cost pressures eased in August, with average input costs across China's service sectors increasing at the slowest pace in six months. Higher operating expenses were generally linked to increased raw material, staff and energy costs.
"Services sector supply and demand continued to expand with improving market conditions, though at a slower pace. The gauges for business activity and total new business remained above 50 for eight consecutive months, but both readings were lower than in July. Weak overseas demand dragged on in August, as new export business contracted for the first time since December," Wang Zhe, senior economist at Caixin Insight Group commented in the report.
The previously released Caixin Manufacturing PMI showed a 1.8-point increase to come in at 51.0 in August, partially offsetting the drag from the decline in the Services PMI. Overall, the Caixin China General Composite PMI edged down by 0.2 points to 51.7.
