China services sector expands for second month, signaling cautious growth

China’s non-manufacturing activity inched higher for a second straight month in June, with the official PMI rising to 50.2 from 50.1 in May. The composite PMI, which blends manufacturing and non-manufacturing activity, rose to 50.6 from 50.5, while manufacturing climbed to 50.3 from 50.0. A reading above 50 marks expansion, so the latest numbers show growth, but only just, leaving the service economy hovering close to stall speed.

The non-manufacturing gauge covers services and construction, giving a broader read on domestic demand than the factory survey alone. In June, the construction sub-index stood at 52.8 and the service-sector sub-index at 50.1, indicating both segments were still expanding but with little momentum. The official survey covers about 4,300 non-manufacturing enterprises, and June’s reading remained below the 50.5 level recorded in June 2025.

The strongest pockets of activity were telecommunications, internet software and IT services, financial services and insurance, all of which were above 55. Real estate services, by contrast, were still struggling. Capital Economics’ Julian Evans-Pritchard saw external demand and AI-related tech demand as the main engines of June growth, while real estate services remained weak.

The National Bureau of Statistics recorded a pickup in the overall level of economic activity in June, and statistician Huo Lihui said the economy gained traction. Even so, Commerzbank’s June PMI details pointed to underlying weakness, with non-manufacturing helped by infrastructure investment but services momentum still lackluster.