Tourists visit Mount Tai in Tai'an, east China's Shandong Province, July 31, 2025. (Xinhua/Zhu Zheng)

China’s service sector expanded at a stronger pace at the start of the third quarter, with service sector activity gaining more momentum due to rising new business volume, which is supported by a fresh rise in foreign demand, according to latest S&P PMI data.

S&P Global China General Services Business Activity Index rose to 52.6 in July, up from 50.6 in June. Posting above the 50.0 no-change mark, the latest data indicated another expansion of service sector activity in China, extending the current period of growth to more than two-and-a-half years. Furthermore, the rate of expansion was the fastest since May 2024. 

Higher new business supported the rise in activity going into the second half of the year, according to panelists. The increase in new work was solid and the fastest recorded in a year, with firms linking the upturn to an improvement in underlying demand conditions and successful business development efforts. 

External demand picked up for the first time in three months, with reports of increased tourism activity and more stable trade conditions driving the fastest increase in export orders since February.

Greater amounts of new work supported a fresh round of job creation in July. After shedding staff in June, service providers raised their staffing levels at the quickest pace
since July 2024. The increase in headcounts led to a slower and only fractional rise in backlogs of work in July.

Amid rising new business and activity, overall business confidence has improved. Service providers were the most upbeat in four months, driven by hopes that better economic conditions and improved global trade flows will support sales and activity growth in the year ahead. 

Commenting on the latest data, Jingyi Pan, economics associate director at S&P Global Market Intelligence said: “July’s S&P Global China General Services PMI revealed that the service sector grew at an accelerated pace going into the second half of the year. Better demand conditions underpinned the latest rise in activity, and this had notably included firmer external demand, as highlighted by the first expansion in new export business in three months.”

It was positive to see business sentiment recovering further, with the overall confidence reaching the highest level since March amid hopes that both global economic and trade conditions may improve in the coming months. A renewed rise in employment also indicates Chinese service providers’ optimism about future, according to Pan.

“Notably, the latest survey signaled a fresh increase in production in July, which also indicates improved business confidence as firms were comfortable to pass on higher costs to clients for the first time in six months. Overall, the service sector fared better in July,” Pan said.


Global Times