China's Services Sector Growth Reaches 6-Month Low in December, According to Private PMI

Employees operate on a camera lens production line for mobile phones at a factory in Lianyungang, Jiangsu province, China, May 27, 2019. REUTERS/Stringer/File Photo Summary: Business growth experiences a slowdown, foreign demand diminishes; Business sentiment improves with positive forecasts for 2026; Companies reduce staff, input costs rise while selling prices drop. BEIJING, Jan 5 (Reuters) - China's services sector experienced its slowest growth in six months during December, driven by a decline in new business and weaker foreign demand, according to a private-sector survey released on Monday. The RatingDog China General Services PMI, developed by S&P Global, fell to 52.0 in December from 52.1 in November, marking the lowest level since June. The 50-point threshold distinguishes between growth and contraction. New business growth also slowed to its weakest in six months, while new export business transitioned into contraction after a period of growth, primarily due to reduced tourist activity. Despite the challenges, business sentiment has improved, with the expectations sub-index reaching a nine-month peak, bolstered by optimistic forecasts regarding market conditions and expansion initiatives for 2026. “The services sector concluded 2025 with a profile of 'modest growth and high expectations,'” remarked Yao Yu, founder of RatingDog, noting that declining employment and fluctuating external demand continue to pose significant challenges. China's economy has faced difficulties in regaining momentum in light of structural issues, including an ongoing property market slump and deflationary pressures, although it remains on track to achieve a growth target of around 5% this year. The government has intensified efforts to reduce overcapacity and price competition among companies to address persistent deflationary trends. Last month, key leaders from the Communist Party pledged to uphold a proactive fiscal policy in the coming year to stimulate both consumption and investment in order to sustain robust economic growth. The survey indicated that firms reduced their workforce for the fifth consecutive month, affecting both full-time and part-time positions, which has led to a slight increase in backlogs. Input costs rose for the tenth straight month, driven by escalating raw material and labor expenses. However, companies have lowered selling prices due to intensifying competition, which has constrained their pricing power. The Composite Output Index, measuring combined manufacturing and services performance, registered at 51.3, up from 51.2 in November. Reporting by Liangping Gao and Ryan Woo; Editing by Sam Holmes. Our Standards: The Thomson Reuters Trust Principles.