China's Services Sector Shows Steady Growth Amidst Cooling Momentum

The most recent RatingDog Services PMI published now suggests ongoing growth in China's personal services industry. The June reading came in at 54.1, a slight decrease from May's 54.4. Notwithstanding this little decline, the number is still far over the 50-point mark, therefore indicating a continuing increase in service activity. Though the rate of that growth has slowed down, this sustained recovery points to resiliency in China's service sector.

Although the services sector is still expanding, the little decline in speed from May to June is the main lesson learned. This implies that although the industry is still doing great, it is not growing at the same pace as the prior month. This delicate performance could affect risk assets, currency markets, and sectors especially vulnerable to China's economic health, indicating strong but not booming growth.

For market players, this statistic usually indicates "steady growth, somewhat less momentum" instead of a major economic shock. The definition of the indicator says that while misses can be slightly negative, PMI releases that exceed expectations usually provide minor support for the Chinese Yuan (CNY). Though the weaker-than-expected decline from May's print suggests the general market reaction is probably minimal, in this case the actual June reading of 54.1 exceeded the projection of 53.0—a positive beat.