China’s Services Sector Posts Slowest Growth in Five Months as Demand Softens

China’s services industry expanded at its weakest pace in five months in November, highlighting ongoing challenges for the world’s second-largest economy. According to the latest RatingDog China General Services PMI, compiled by S&P Global, the index slipped to 52.1 from October’s 52.6. Although still above the 50-point threshold that signals growth, the reading reflects a noticeable loss of momentum.

The results mirror the government’s official services PMI, released earlier this week, which dipped into contraction territory at 49.5 compared with 50.2 in October. Analysts note that the RatingDog index offers deeper insight into the performance of smaller, export-oriented service providers—particularly along China’s eastern coastal regions—while the official government PMI largely captures trends among bigger firms and state-backed enterprises.

China’s broader economic outlook has dimmed in recent months. Third-quarter GDP growth slowed to its weakest level in a year, raising concerns about waning domestic demand and the uneven nature of the country’s post-pandemic recovery. Policymakers have signaled a stronger focus on boosting consumption over the next five years, though large-scale stimulus has yet to materialize.

The November survey showed new orders rising at their slowest pace in five months, even as export demand returned to expansion after October’s decline. S&P Global attributed the improvement in external orders to easing uncertainty around U.S.–China trade relations. However, RatingDog Founder Yao Yu emphasized that shrinking employment levels, thinning profit margins, and weakening business expectations continue to weigh heavily on the sector.

Employment in services fell for a fourth straight month, contributing to an increase in unfinished workloads. Meanwhile, input costs—from fuel to office supplies—continued to climb, prompting some firms to pass on higher expenses through modest increases in output charges.

Business confidence remained positive in November but eased to its lowest point since April. The Composite Output Index, which tracks combined manufacturing and services performance, also slipped to 51.2 from 51.8 in October, underscoring the economy’s slowing momentum.