China’s Official Services Index at 50.0 as New Orders Fall to 45.2 in October
Key Facts
China’s services business activity index stood at 50.0 in October, down 0.2 points from the previous month, while the services new orders index fell to 45.2 after a decline of 1.5 points, according to the National Bureau of Statistics of China. The first reading puts services activity at the threshold between expansion and contraction, while the second signals weak new orders during the month. The figures were part of China’s official survey and differ from the private RatingDog survey, whose headline reading is the focus of the original news. The available evidence does not include a documented open-source RatingDog reading for October, so the official figures remain separate context from that reading. The gap between activity and orders is significant in October’s picture: the activity index held at the threshold while orders registered a lower level.
Weakness extended to broader indicators: the non-manufacturing business activity index came in at 49.7 in October, down 0.5 points from September, while the official composite output index stood at 49.7 after falling one point. The non-manufacturing reading includes services and construction, so it is not a measure of services alone. The non-manufacturing new orders index also came in at 44.4, down 2.1 points from the previous month, further weakening the demand picture across this broader range. Chief statistician Hu Lihui said the decline in the non-manufacturing activity index was partly linked to falling activity in some service sectors. He added that financial activity was the only service-sector index to decline, and that this drop, which he described as significant, was the main reason the sector’s business climate weakened slightly during the month.
Performance varied across service activities. The National Bureau of Statistics said activity indexes for rail transport, water transport, postal services, internet software and information technology services were above 55, within the range of relatively high activity. By contrast, indexes for capital market services, insurance and real estate remained below the neutral threshold. Hu Lihui attributed improvements in transport, accommodation, and cultural and sports entertainment to travel and spending during the National Day holiday. The bureau said these holiday-related activities saw a clear recovery. This divergence puts the 50.0 services reading in the context of a sector that combined activities buoyed by travel with others that declined, with financial weakness described by the chief statistician as the main driver of the overall drop.
Services price and employment indicators sent mixed signals in October. The input prices index was 51.4, down 0.8 points from the previous month, while the selling prices index came in at 49.6 after falling one point. The input prices index therefore remained above 50, while the selling prices index was below it. The employment index stood at 46.7, up 0.5 points from the previous month, but remained below the neutral threshold. These figures show a monthly improvement in the employment index even as it stayed in contraction territory, and highlight diverging trends in input and selling prices. The bureau’s available material provided no separate explanation for these price movements or the employment index.
On business expectations, the services activity expectations index stood at 55.2 in October, down 0.3 points from September, according to the National Bureau of Statistics. The bureau said most companies remained confident in the development of the services market. That confidence came alongside an actual activity reading of 50.0 and new orders at 45.2, pointing to a divergence between company expectations and recorded orders. For comparison with the private survey, RatingDog’s services index rose to 51.6 in September from 51.4 in August, beating the market forecast of 51.3 for that release, according to Investing.com. Those figures refer to the September release and do not represent October’s reading or expectations; the available evidence contains no documented open-source reading for the October release at the center of this report.
October’s official indicators also reflect broader weakness in demand. Zhang Lichun, an analyst at the China Federation of Logistics and Purchasing, said that "insufficient demand is increasing downward pressure on the economy," according to Reuters via MarketScreener. After the manufacturing data, economists called on the government to provide more support for growth, according to the same source. An analyst at Pinpoint Asset Management said China would need greater support for domestic demand if external demand weakened in 2027. Another economist called for an expansion of mortgage interest subsidies to support household confidence. These comments put domestic demand at the center of the debate over the support outlook, while the official services expectations index remained at 55.2, with most companies retaining confidence, according to the bureau.