The pullback from 54.4 to 54.1 is marginal enough that it shouldn’t shift the broader narrative of resilient Chinese domestic demand, but the acceleration in export orders to a 20-month high is the more interesting signal for markets watching China’s external rebalancing, particularly against the backdrop of elevated foreign equity outflows this year. The return of pricing power, with charges rising at the fastest pace since May 2024, offers a tentative counterpoint to persistent deflationary concerns in China, though one month of data is not yet a trend. The back-to-back employment gains, the first since 2024, will be watched closely for signs of a genuine labour market inflection rather than a one-off restocking effect.

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The RatingDog China General Services PMI eased to 54.1 in June from 54.4, still near a three-year high, as export orders grew fastest since October 2024 and firms raised prices for the first time in four months, RatingDog said.

Summary:

• The RatingDog China General Services Business Activity Index eased to 54.1 in June from 54.4 in May, still marking the third-steepest increase in services activity in nearly three years
• Services exports grew for a second consecutive month, expanding at the fastest rate since October 2024
• Outstanding business increased for an eighth consecutive month, at the second-fastest rate in a year
• Employment rose for a second straight month, the first back-to-back increase since 2024, with the pace of staffing growth the fastest since July 2024
• Companies raised charges for the first time in four months and at the strongest rate in over two years, even as input cost inflation eased from May’s 19-month high
• The Composite PMI Output Index, blending manufacturing and services, eased to 53.6 in June from 54.0, still among the fastest rates of growth in three years and above the 12-month average
• Composite employment rose for a second consecutive month, the first back-to-back increase since mid-2023, while composite input price inflation eased to a five-month low

Chinese services activity continued to expand solidly in June, even as the pace of growth eased slightly from May’s recent high, according to the latest RatingDog China General Services PMI survey. The headline Business Activity Index came in at 54.1, down from 54.4 in May but still comfortably above the 50.0 no-change mark, pointing to the third-steepest increase in services activity in nearly three years. Survey respondents linked the gain to stronger client demand, new client acquisitions and the successful development of projects, according to the report.

The standout signal came from overseas demand. Services exports grew for a second consecutive month and at the fastest pace since October 2024, reinforcing what RatingDog founder Yao Yu described as a broader trend of improvement in overseas orders even as domestic new business growth decelerated slightly. Outstanding business rose for an eighth straight month, at the second-fastest rate in a year, prompting firms to keep expanding headcount. Employment increased for a second consecutive month, the first back-to-back rise since 2024, with the pace of job creation accelerating to its fastest since July 2024.

Pricing power showed a notable shift. Service providers raised their charges for the first time in four months and at the strongest rate in over two years, citing higher personnel expenses, raw material costs, business expansion and transportation costs, with some firms even reporting new vehicle purchases. Input cost inflation, which has now risen for sixteen consecutive months, moderated from May’s 19-month high, easing overall cost pressures even as selling prices firmed. Confidence in the year-ahead outlook remained broadly steady, supported by new business development, improving market conditions and new product launches.

At the composite level, blending manufacturing and services, the Composite PMI Output Index eased to 53.6 in June from 54.0 in May, still among the fastest rates of expansion in three years and above the 12-month average of 52.4. Composite employment rose for a second consecutive month, the first back-to-back increase since mid-2023, while composite input price inflation slowed to a five-month low even as selling prices for goods and services rose at their strongest pace since March 2022. Yao Yu said the acceleration in export business, sustained employment growth and the return of selling prices to expansionary territory pointed to strengthening domestic growth drivers alongside improving external demand, adding that the services PMI is expected to remain in expansionary territory in the near term.