Goldman Sachs China: Unofficial Services PMI Edged Down in December

Goldman Sachs reports that China's unofficial services Purchasing Managers' Index edged down marginally to 52.0 in December 2025 from 52.1 in November, indicating a slight moderation in service sector expansion momentum. This print aligned with the Bloomberg consensus forecast. The modest headline decline was driven by softer underlying metrics. New business orders dropped to 51.8 from 52.9, pointing to cooling demand growth. More notably, new export order volumes slipped significantly into contraction territory at 49.6, highlighting clear weakness in external demand. Labor market conditions softened further, with the employment sub-index declining to 48.9, as surveyed firms cited mounting cost pressures and ongoing corporate restructuring plans as primary reasons for reducing both full-time and part-time staff. Pricing dynamics further underscore the operational challenges facing service providers. While input prices remained elevated at 51.3 due to rising raw material and labor costs, output prices fell to 49.7, entering contraction. This divergence reflects intense market competition, forcing companies to implement promotional discounts to sustain sales volumes. Consequently, profit margins continued to face significant compression throughout December. Despite these headwinds, firms noted that targeted promotional activities and incremental customer interest provided some support for top-line sales growth. Overall, the data reveals a services sector expanding at a decelerating rate, challenged by deteriorating export demand, persistent pricing pressures, and cautious employment practices.