China's Services Activity Slows in November

BEIJING (Reuters) – China's services activity expanded at a slower pace in November, pressured by easing new business growth, including in exports, according to a private sector survey. The economy braces for a rocky ride due to potential new U.S. tariffs under a second Trump administration.

The Caixin/S&P Global services purchasing managers' index (PMI), released on Wednesday, fell to 51.5 from 52.0 in October, but remained above the 50-mark that separates expansion from contraction.

This decline aligns with the official PMI released on Saturday, indicating that non-manufacturing activity weakened to 50.0. China's economy has faced multiple pressures this year, including weakened consumer and business confidence due to a prolonged property downturn, local government debt risks, and weakening global demand.

In response, Beijing has implemented various policy measures, including increased fiscal support and monetary easing, to support economic growth.

While markets anticipate more support from policymakers to bolster recovery, U.S. President-elect Donald Trump's threat to impose tariffs exceeding 60% on Chinese imports raises new uncertainties for the world's second-largest economy.

Service providers expressed some confidence in market improvements due to policy support; however, concerns about the future trade environment persist, noted Wang Zhe, a Senior Economist at Caixin Insight Group.

The survey revealed a decline in the new business sub-index to 51.8 in November from 52.1 the previous month, with a slowdown in new business inflows from abroad. Nevertheless, companies hired additional staff for the third consecutive month to manage increased workloads, and overall business confidence rose to its highest level in seven months.

Firms reduced selling prices amid competition but benefited from lower material costs, resulting in a decrease in average input costs.

Wang stated that while economic recovery seems to be gaining momentum in November, downside pressure on growth remains significant. "The structural and cyclical pressures facing the economy are expected to continue, coupled with the likelihood of continued accumulation of external uncertainties, which requires sufficient policy buffers," he said.

The Caixin/S&P Global Composite PMI, which combines manufacturing and services PMIs, rose to 52.3 from 51.9, driven by accelerated expansion in the manufacturing sector.