China business activity slows in November as services momentum wanes

China's business activity continued to expand in November, though growth momentum slowed, S&P Global reported Wednesday.

The RatingDog China composite purchasing managers' index fell to 51.2 in November from 51.8 in October.

A reading above the 50.0 neutral mark indicates an overall increase in month-on-month business activity, while a reading below signals a contraction.

Specifically, the general services PMI fell slightly to 52.1 in November from 52.6 in October.

While the reading extended the growth streak since January 2023, it marked the softest pace in five months.

According to S&P Global, the growth is driven by a sustained increase in new business, though staffing levels continued to fall.

"In terms of sub-components, demand for services remained in expansion in November, though performance diverged. Specifically, the new orders index continued the growth trend seen since the beginning of 2023, though the pace of growth slowed compared to the previous month. New export business showed clear improvement, benefiting from increased marketing efforts and a temporary easing of expectations regarding Sino-US trade uncertainty, which led to improved external demand," said RatingDog Founder Yao Yu.

Input prices continued to increase which services firms attribute to higher input material, office supplies, and fuel.

"When it comes to price indicators, input prices rose for the ninth consecutive month, driven mainly by rising prices for raw materials, office supplies, and energy, though the pace of increase slowed. Output prices returned to expansionary territory; to alleviate cost pressures, some firms chose to pass costs on to the terminal market. Profit margins in the services sector remained under pressure," explained Yu.

S&P Global said firms remain upbeat on service‑sector activity, expecting better market conditions and expansion plans to drive growth in the year ahead.

On Monday, S&P Global reported that manufacturing PMI contracted to 49.9 in November from from 50.6 in October.

S&P Global compiles the PMI figures each month using survey responses from a panel of around 650 private and state-owned service sector companies and manufacturers. The composite figure is a weighted average of the services and manufacturing indices.