China services activity quickens on stronger domestic demand, private PMI shows

China's services sector showed a strengthening trend in August, according to a private-sector survey, with services activity expanding at a faster pace than previously reported. The RatingDog China General Services PMI rose to 51.4 from 50.4 in July, remaining above the 50-point threshold that separates growth from contraction. The increase was primarily driven by stronger domestic demand, which helped firms add staff for the fourth consecutive month.

However, this private-sector report contrasts with the official survey released on Monday, which indicated slower services activity due to sluggish domestic demand. The divergence may be attributed to differences in coverage and sampling methods between the two surveys. Despite the stronger services activity, input prices have risen for an 18th consecutive month, citing higher costs for labor, materials, fuel, and equipment replacement.

Business confidence for the coming year also improved, supported by expansion plans, new projects, promotions, and expectations of stronger market demand. The RatingDog China General Composite PMI, which covers both manufacturing and services, rose to 52.1 in August from 50.8 in July, indicating faster growth in overall private-sector activity.

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