China Services Sector Growth Slows to Three-Month Low

China's services sector expanded at its slowest pace since July in October, with the RatingDog China General Services PMI falling to 50.8 from 51.6 in September. While the index remained above the 50-point threshold separating growth from contraction, the result missed market expectations of 51.5. The broader composite PMI also eased to 52.0, as growth in manufacturing output failed to fully offset the moderation in services.

RatingDog reported that business confidence dropped to a three-month low. This decline was driven by intensifying competition that forced firms to lower average selling prices for the second consecutive month. Simultaneously, input costs for labor, raw materials, and fuel increased at the fastest pace in five months, further squeezing profit margins. Yao Yu noted that "renewed discounting and rising cost pressures weighed on profitability."

Despite these pressures, the sector saw some positive trends. Services employment and new export orders grew for a sixth consecutive month. Additionally, AI-enabled efficiency gains helped firms reduce business backlogs for the first time since October 2025. The Golden Week holiday provided little support to the sector during this period.