The survey, predominantly covering private and export-oriented companies, echoed the broader official PMI released on Sunday, revealing that activity in the services sector sank to a five-month low.
China, the world’s second-largest economy, has experienced uneven growth in recent months, prompting calls for increased policy support to meet a targeted growth rate of approximately 5%.
In June, the new orders subindex dropped to 52.1 from 55.4 the previous month. Despite strong exports in May, overseas demand also showed a slight decline.
Business confidence levels dipped to their lowest since March 2020, driven by concerns over the global economy and heightened competition. Service providers curtailed hiring last month, reversing gains made in May.
However, there was some relief as inflation rates for both input and output prices moderated, easing pressure on business owners grappling with increased costs for materials, labor, and transportation.
The Caixin/S&P composite PMI, tracking services and manufacturing sectors, fell to 52.8 from 54.1, indicating broader economic slowdown.
Attention now shifts to the upcoming third plenum in mid-July, a key leadership meeting expected to announce reforms. Policy advisers anticipate measures that redistribute income from central to local governments, aiming to reduce reliance on land sales, to be a focal point of discussions.
“Fiscal and tax reforms should aim to boost market confidence,” remarked Wang Zhe, senior economist at Caixin Insight Group.