China Rating Dog December 2025 Services PMI 52.0 (expected 52.0, prior 52.1)

Summary:

• China services PMI remained in expansion but slowed further in December

• New orders grew at the weakest pace in six months

• Export services demand slipped back into contraction

• Job shedding continued for a fifth straight month

• Business confidence rose to a nine-month high

China’s services sector continued to expand in December, but the pace of growth slowed to its weakest level in six months, reinforcing signs that the post-pandemic recovery remains uneven and fragile despite improving sentiment toward 2026.

The latest PMI data showed the RatingDog China General Services PMI easing slightly to 52.0 from 52.1 in November. While the index remained comfortably above the 50.0 threshold that separates expansion from contraction, the reading marked a fourth consecutive monthly deceleration in growth and highlighted ongoing demand and employment challenges.

Business activity and new orders both continued to rise, supported by promotional activity and improved domestic customer interest. However, the rate of expansion in sales slowed to its weakest since June, as new export business slipped back into contraction. Companies cited reduced tourist inflows, particularly from Japan, as a key drag on overseas demand, underscoring continued volatility in external services activity.

Labour-market conditions remained a notable weak spot. Services firms cut staffing levels for a fifth straight month, with the pace of job shedding the sharpest since September. Respondents pointed to cost pressures and ongoing restructuring efforts as reasons for workforce reductions, affecting both full-time and part-time employment. Reduced capacity contributed to a modest accumulation of backlogs, even as overall demand growth softened.

Pricing dynamics continued to reflect deflationary pressures at the consumer-facing level. Input costs rose for a tenth consecutive month, driven by higher raw material and labour expenses, with inflation running at one of its faster rates of 2025. Despite this, intense competition limited pricing power, prompting service providers to cut output charges for the second time in three months in an effort to support sales.

At the broader economy level, the China Composite PMI edged higher to 51.3 in December (prior 51.2), marking a seventh straight month of expansion. The increase was supported by both services growth and a renewed rise in factory output, although total new business expanded at the slowest pace in six months due to weaker export demand. Job shedding persisted at the composite level, while overall selling prices continued to fall despite rising costs.

Encouragingly, business confidence improved markedly. Expectations for future activity climbed to a nine-month high, with firms increasingly optimistic that stronger market conditions, expansion plans, and policy momentum will support growth in 2026. Even so, ongoing employment contraction and external demand uncertainty remain key constraints on the near-term outlook.

This article was written by Eamonn Sheridan at investinglive.com.