China services PMI beats forecasts as domestic demand offsets weaker exports

China's services sector grew faster than expected in August, according to a private survey released Thursday. Domestic demand helped drive a fourth straight month of job creation, closing out a week of data that has consistently shown private sector readings outpacing official figures.

The RatingDog China General Services PMI climbed to 51.4 in August from 50.4 in July, staying above the 50 threshold that signals expansion. RatingDog founder Yao Yu pointed out that the reading remained the second weakest in 14 months, calling it a modest rebound after July recorded the lowest result since September 2024. New orders extended their uninterrupted growth streak to 44 months, with the rate of increase accelerating from July's four-month low. Yao credited the improvement primarily to stronger domestic conditions. Export orders also grew for a fourth consecutive month, but at a much slower pace than June's 20-month peak.

Employment stood out in the data, rising for four months in a row — the longest hiring streak since 2023 — with the pace of job creation picking up to levels last seen only a few times in three years. RatingDog attributed the hiring to business expansion, stronger client demand and better pay packages to draw and keep workers. Work backlogs grew for a tenth straight month, but the increase was the weakest since April, suggesting that expanding capacity is beginning to catch up with demand.

Input costs increased for an 18th consecutive month, with firms citing higher costs for labour, materials, fuel and equipment. The rate of cost inflation ticked up from July's six-month low. Selling prices rose for a third month in a row, the longest stretch of output price hikes since the first half of 2024, though the increase was noted as only marginal. Business confidence over the next 12 months improved from July's low point, supported by expansion plans, new ventures and expectations of better market demand, though sentiment remained below the 2026 average so far.

The broader RatingDog China Composite PMI, which combines manufacturing and services, rose to 52.1 in August from 50.8 in July. Both sectors saw faster growth in output and new orders. Composite employment also increased for a fourth consecutive month, the longest period of job growth in more than five and a half years, the survey reported.

Thursday's data contrasts sharply with Monday's official figures, where analysts said weak domestic demand hurt services activity despite the summer travel season. The NBS non-manufacturing index held steady at 49.0. The gap matches the pattern seen earlier in the week in manufacturing: the official NBS Manufacturing PMI came in at 49.8, still in contraction, while the private RatingDog Manufacturing PMI reached 51.5, a two-month high. Analysts generally point to differences in survey coverage and sampling as the reason, with the official polls weighted more toward large state-linked enterprises and the RatingDog surveys tilted toward smaller, export-oriented companies. Taken together, this week's data suggests China's private sector — especially services and export-facing manufacturing — is running noticeably stronger than the more cautious picture from official statistics.

Earlier:

• Economic and event calendar in Asia Thursday, September 3, 2026 - another China PMI

Summary:

• The RatingDog China General Services PMI rose to 51.4 in August from 50.4 in July, staying above the 50 growth threshold, though it was the second lowest reading in 14 months.
• New business grew at a faster rate after a four-month low in July, driven mainly by stronger domestic demand as export order growth slowed.
• Services employment increased for a fourth straight month, the longest hiring stretch since 2023, with RatingDog noting one of the strongest rates of job creation in three years.
• Input costs rose for an 18th consecutive month, due to higher labour, materials, fuel and equipment costs, while output charges increased for a third month at an unchanged marginal pace.
• Business confidence over the coming 12 months improved from July's low, supported by expansion plans, new projects, promotions and expected market growth.
• The RatingDog China Composite PMI, covering both manufacturing and services, rose to 52.1 in August from 50.8 in July, with both sectors posting faster growth in output and new business.
• The reading contrasts with Monday's official NBS survey, where analysts said sluggish domestic demand weighed on services activity despite the summer travel peak, with the divergence attributed to differences in survey coverage and sampling.
• This week's full China PMI set now shows the official Manufacturing PMI at 49.8 and Non-Manufacturing PMI at 49.0, both released Monday, against the private RatingDog Manufacturing PMI at 51.5 from Tuesday and today's Services PMI at 51.4, a consistent pattern of private surveys outperforming official ones across the week.