China Services Sector Growth Slows Sharply in July Amid Weak Domestic Demand

Key Facts

The latest downturn in Chinese economic data highlights the structural challenges facing the world's second-largest economy in maintaining stable growth momentum. According to reports, China's General Services PMI fell from 54.1 in June to 50.4 in July, marking its lowest reading since September 2024. This significant slowdown is primarily attributed to weakening domestic demand, which also dragged the Composite PMI down to 50.8.

Despite the headline deceleration, the data showed that total new business increased for a 43rd consecutive month, though growth softened to its weakest pace since March. In contrast, external demand remained relatively resilient as new export business stayed in expansion for a second month, while cost pressures eased with input price inflation hitting its lowest since January. Employment also rose for a third straight month, the longest hiring streak since late 2024.

Looking ahead, business confidence has weakened to its lowest level since February 2020, highlighting growing caution over the economic outlook. With specific instrument price data currently unavailable, market attention remains on potential stimulus signals. According to the economic calendar, global markets recently processed major events including the US Federal Reserve's decision to hold interest rates at 3.75% on July 29, 2026, which continues to influence emerging market liquidity.