China’s Services Sector Sees Strongest Growth in Over a Year: Caixin PMI Hits 52.6 in July

📌 Key Takeaways

• Caixin Services PMI rose to 52.6 in July, beating forecasts
• Tourism and external demand rebounded, lifting growth
• New business expanded at the fastest rate in a year
• Employment rose at the quickest pace since July 2024
• Input and selling prices increased for the first time in months
• Business sentiment hit a 4-month high on global recovery hopes

China’s Services Sector Rebounds with Strong July Performance

The Caixin China General Services PMI rose to 52.6 in July 2025, from a nine-month low of 50.6 in June. This marked the fastest expansion in the sector since May 2024 and came in well above expectations of 50.4.

A reading above 50 indicates growth, while below 50 signals contraction. The July data suggests that China’s services sector is gaining traction after a sluggish second quarter.

✈️ Foreign Demand and Tourism Fuel Growth

• New business grew at the strongest pace in a year, with foreign demand returning to positive territory for the first time in three months.
• The fastest external demand growth in five months was driven by:
  • Rebound in tourism activity
  • More stable trade environment
  • Gradual improvement in consumer sentiment

This uptick in foreign interest highlights the rising global appetite for Chinese services, especially in travel, hospitality, and logistics.

📊 Job Market and Workloads Improve

• Employment in the services sector rose at the quickest pace since July 2024, rebounding from a decline in June.
• Backlogs of work also increased, signaling stronger capacity utilization across businesses.

These improvements point to more confident hiring and better workload distribution among firms.

Read More: China’s Manufacturing Activity Rebounds in June

💰 Price Pressures Return

• Input costs rose due to higher expenses for raw materials, fuel, and wages.
• As a result, selling prices increased for the first time in six months, indicating firms are passing on costs to customers again.

This could add inflationary pressures if the trend continues in the coming months.

Business Sentiment at Highest Since March

Looking forward, business optimism improved to the highest level since March 2025. Firms expressed renewed confidence in:

• Global trade recovery
• Tourism demand resurgence
• Easing of domestic and international uncertainties

However, concerns remain about cost pressures and policy uncertainty.

📊 Summary Table

Outlook

The robust services PMI suggests that China’s broader economy is stabilizing, with consumer activity, foreign demand, and hiring all improving.

If this momentum continues, it could help offset recent manufacturing weakness and support China’s post-pandemic recovery.

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