China’s Services Sector Growth Slows in June as Recovery Stalls

China’s service sector activity expanded for the sixth consecutive month in June, but at the slowest pace in five months, according to a Caixin/S&P Global survey released on Wednesday, as demand subdued on post-pandemic recovery momentum stalled.

The Caixin services purchasing managers index for June came in at 53.9, a slower rate of expansion than the 57.1 recorded in May.

Compared to May, company activity and new orders grew at significantly slower rates in June, according to the poll, with several companies reporting weaker than projected market demand.

China’s economy slowed in the second quarter after expanding at a faster-than-expected rate in the first quarter due to rising deflation, high youth unemployment, and weakening foreign demand.

The Caixin/S&P composite PMI, which measures manufacturing and services, decreased to 52.5 in June from May’s 55.6, but this still marks six months of growth.

“Employment contracted, deflationary pressure mounted, and optimism waned in the manufacturing sector,” said Wang Zhe, senior economist at Caixin Insight Group. “Meanwhile, the services sector continued a post-COVID rebound, but the recovery was losing steam.”