In December, China's service sector experienced its most rapid growth in seven months, driven by a boost in business inflows, as reported by S&P Global. The Services Purchasing Managers' Index (PMI) rose to 52.2 in December, an increase from 51.5 in November, surpassing the anticipated forecast of 51.7.
This marks two consecutive years of expansion in the services sector, with activity growth hitting its highest since May. The growth in incoming new work accelerated to its swiftest pace in five months, supported by promotional efforts and stronger underlying demand. Meanwhile, domestic demand propelled sales growth, despite a decline in export business, which fell for the first time since August 2023.
Amidst the increase in business inflows, outstanding work continued to accumulate. Employment, however, saw a decline for the first time since August, even as capacity pressures intensified. On the pricing front, the survey indicated a rise in cost inflation, attributed to higher input materials and wage expenses. Service providers passed on some of these rising costs to clients, marking the first increase in average selling prices since June. Business sentiment remained optimistic, underpinned by expectations that business development initiatives and supportive government policies will spur sales growth in 2025.
Despite the accelerated growth in service activities, it was not enough to counterbalance the deceleration in manufacturing output. The composite output index slipped to 51.4 in December from 52.3 in November. Although the sector maintained its streak of continuous expansion for 14 months, the growth rate has softened to the lowest level since September.
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