FX.co ★ China Services Activity Returns to Contraction

China’s official NBS Non-Manufacturing PMI fell to 49.0 in July 2026 from 50.2 in June, signaling a renewed contraction after two months of modest expansion and surprising markets that had expected a flat reading. The business activity index for the services sector slipped to 49.3 from 50.4, while the construction index declined to 47.0 from 49.0. Within services, postal services, telecommunications, broadcasting, and culture and entertainment remained robust, with business activity indices above 55.0, whereas capital market services and real estate stayed in contraction territory.

The new orders index weakened further, dropping to 44.4 from 48.0, with construction orders falling sharply to 40.1 from 46.3 and services orders easing to 45.2 from 48.4. On the price front, input costs were broadly stable at 49.7, but sales prices slipped to 47.9 from 48.4, pointing to increased pricing pressures. Employment also edged down, with the relevant index declining to 45.4 from 45.8. Despite the softer current conditions, business expectations improved marginally to 55.4 from 55.3, indicating that firms remain cautiously optimistic about future activity.