China Services PMI Beats Forecasts as Strong Demand Supports June Growth

China’s services sector expanded at a faster-than-expected pace in June, highlighting the resilience of the country’s economy despite ongoing challenges in domestic consumption. A private business survey released on Friday showed that robust demand from both local and international markets continued to support growth, keeping the services industry in expansion territory for more than three consecutive years.

According to the latest RatingDog Services Purchasing Managers’ Index (PMI), the index eased slightly to 54.1 in June from 54.4 in May. Despite the modest decline, the reading comfortably exceeded market expectations of 53.0. Any PMI reading above 50 signals expansion, and the latest result marks the services sector’s continued growth streak that began in January 2023.

The survey found that new business activity remained healthy throughout June, driven by steady domestic demand and rising overseas orders. Export demand was particularly strong, with services exports recording their fastest pace of growth since October 2024, reinforcing the importance of international markets to China’s economic recovery.

Businesses also faced higher operating costs during the month, largely due to supply chain disruptions linked to tensions in the Middle East. Rising input costs prompted service providers to increase their selling prices for the first time in four months, indicating that companies are beginning to pass higher expenses on to customers.

The private RatingDog PMI presented a more optimistic assessment of China’s economy than the official government PMI figures released earlier in the week. The difference largely reflects the surveys’ methodologies. Official PMI data primarily tracks larger state-owned enterprises, while the private survey focuses more on smaller, export-oriented businesses that have shown greater resilience in recent months.

China’s export sector continues to serve as a key pillar of economic growth, helping offset weakness in domestic demand and the prolonged slowdown in the property market. Strong overseas demand has supported business activity across multiple industries, providing momentum even as consumer spending within China remains uneven.

The latest PMI data suggests that China’s services sector remains one of the economy’s strongest performers, with expanding business activity, rising export orders, and resilient demand offering a positive outlook for growth in the months ahead. Investors and policymakers will continue monitoring upcoming economic indicators to assess whether this momentum can be sustained amid global economic uncertainty and ongoing geopolitical risks.