Economic Buzz: China service sector activity expands modestly in December
Companies cut staffing levels again, which contributed to a slight accumulation of backlogged work. Meanwhile, intense market competition contributed to a renewed fall in output prices, even though input costs continued to increase.
Nevertheless, business confidence regarding the year-ahead improved to a nine-month high.
The headline RatingDog China General Services Business Activity Index fell slightly from 52.1 in November to 52.0 in December. Posting above the neutral 50.0 mark, the latest reading indicated another expansion of services activity in China, thereby extending the current period of growth to three years. That said, the rate of increase was the softest in six months and modest overall.
Higher new business contributed to the sustained expansion in services activity. Services companies in China remained cautious with regards to staffing levels in December, as headcounts fell for the fifth month in a row.
Higher raw material and wage costs led to a tenth successive monthly increase in average input prices. While modest, the rate of inflation was among the highest seen in 2025.
The Composite Output Index posted above the 50.0 no-change threshold at 51.3 in December, up slightly from 51.2 in November, to indicate a further increase in overall business activity across China at the end of the year.
The rise in output was supported by both higher services activity and a renewed increase in factory production. Total new business also increased in December, albeit with the rate of expansion falling to a six-month low due to a fresh reduction in new export business.
Meanwhile, job shedding continued amid muted capacity pressures and relatively subdued business confidence. Overall selling prices continued to fall in December, despite a slight intensification of cost pressures.
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