China’s Private Services Index Falls to 50.8 in October as Confidence Weakens
Key Facts
China’s services activity growth slowed in October, with the headline RatingDog index falling to 50.8 from 51.6 in September, its weakest reading since July, Reuters reported. The index remained above the 50 level that separates expansion from contraction, meaning activity continued to grow at a slower pace. The reading was below market expectations of 51.7, according to release data published in Investing.com’s economic calendar. The figures show a month-on-month loss of momentum in services, while the reading does not indicate a contraction in activity in the private survey. By contrast, data from the National Bureau of Statistics painted a weaker picture for some measures of demand and non-manufacturing activity.
On the demand side, respondents to the RatingDog survey said growth in new business remained close to its September pace. But new business from abroad rose for a sixth consecutive month, the longest such growth streak since 2024, Reuters reported. Continued external demand offers support within the sector as the headline index slowed. The official survey, meanwhile, recorded a services new orders index of 45.2 in October, down 1.5 points from the previous month. The new orders index for services and construction combined stood at 44.4, down 2.1 points. These official measures cover a different scope from the RatingDog survey, so their readings reflect separate demand trends.
In official activity data, the non-manufacturing business activity index stood at 49.7 in October, down 0.5 points from September, according to the National Bureau of Statistics. The index includes services and construction and is not limited to services companies. The composite output index also fell to 49.7, down one point from the previous month, signaling slower output and overall business activity. By contrast, the RatingDog composite index, which covers manufacturing and services, registered 52.0 in October, compared with 52.4 in September, as expansion slowed to its weakest pace in three months. These readings illustrate the surveys’ different scopes, alongside a loss of momentum in activity measures during the month.
Employment measures diverged between the two surveys. Reuters said services companies participating in the RatingDog survey continued to add full-time and part-time employees to meet existing workloads. In the official survey, the services employment index rose to 46.7 in October, up 0.5 points from September, but remained below 50. On prices, respondents to the RatingDog survey said input prices rose at the fastest pace in five months, driven by higher costs for materials, fuel and wages. At the same time, companies cut average selling prices for a second consecutive month amid intensifying competition, while the Golden Week holiday offered little support to prices, Reuters reported.
Confidence among services companies in the RatingDog survey fell to its lowest level since July, with companies citing concerns over rising input prices and intensifying competition, Reuters reported. In the official survey, the services activity expectations index held at 55.2 in October, despite falling 0.3 points from September. The non-manufacturing business activity expectations index registered 54.7, down 0.8 points, but remained above the expansion threshold, according to the National Bureau of Statistics. The bureau said the majority of companies maintained confidence in the development of the services market. The official survey in October covered 4,300 samples from 43 non-manufacturing sectors and was based on monthly questionnaires sent to purchasing managers at selected companies.
By sector, the National Bureau of Statistics said activity indexes for railway transport, water transport, postal services, internet software and information technology services exceeded 55 in October. By contrast, indexes for capital market services, insurance and real estate remained below the threshold, according to the official statement. These differences place services performance in a mixed picture across activities, alongside weak new orders in the official survey. The RatingDog reading of 50.8 remains above the contraction level, despite coming in below September’s reading and market expectations. Official expectations indexes for services and non-manufacturing also remained above 50, while declining from the previous month.