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【caixin.com】after a slight improvement in july, the service industry's business climate declined again in august. the supply and demand of the service industry continued to expand, but the pace slowed down, and employment shrank again.

the caixin china general services business activity index (service pmi) for august, released on september 4, was 51.6, down 0.5 percentage points from july, the second lowest in the year, indicating that the service industry continued to expand but at a slowing pace.

previously published, returning to above the boom-bust line. the two major industry pmis rose and fell, with the impact roughly offsetting each other. the caixin china composite pmi for the month remained unchanged at 51.2 in july, still the lowest in nearly ten months.

　　, the same as in february, the lowest in the year; the business activity index of the service industry rebounded by 0.2 percentage points to 50.2; mainly affected by the decline in the manufacturing industry's business climate, the composite pmi fell by 0.1 percentage point to 50.1, the lowest since 2023.

according to the sub-item data of caixin china services pmi, the expansion of supply and demand in the services industry slowed down in august, and the new order index fell within the expansion range. external demand was better than overall demand, and the new export order index rebounded slightly from just above the critical point in july. the interviewed companies said that overseas customers' increased interest in tourism and other industries provided a basis for the growth of new export business volume.

although the supply and demand of the service industry continued to expand, the job market weakened again in august, with the employment index falling into the contraction range, with employee resignations and corporate layoffs being the influencing factors. with the increase in new business volume and the reduction in employment, the backlog of business increased slightly.

increased raw materials, wages and transportation costs have led to rising service costs, and the input price index in august rose to the highest level since july 2023. however, due to weak market conditions and intensified competition, companies have to cut prices for promotions. the sales price index fell below the boom-bust line for the first time in nearly seven months, hitting a new low since may 2022, and corporate profit margins were squeezed.

confidence in the service industry market has rebounded, with the business expectation index rising slightly in the expansion range for two consecutive months in august, but still below the long-term average. service industry companies generally hope that future market conditions will improve and business development will be effective, driving growth in business activities.

wang zhe, senior economist at caixin think tank, said that in august, the prosperity of both the manufacturing and service industries was in the expansion range, and the marginal slowdown in the growth rate of supply and demand in the service industry was in contrast to the increase in supply and demand in the manufacturing industry. the comprehensive employment index was slightly below the prosperity line. under the condition of rising comprehensive costs, the sales prices of the manufacturing and service industries declined to varying degrees, and the profit pressure on enterprises increased further. considering the more aggressive full-year economic growth target, it will be difficult and challenging to stabilize growth in the next few months. there are still outstanding problems such as insufficient effective domestic demand, great uncertainty in external demand, and weak optimistic expectations of market players. there is still room for current fiscal and monetary policies, and the urgency of increasing normal support and promoting the implementation of previous policies has further increased.