In May, China’s services sector experienced its most rapid growth in three months, according to a private survey by S&P Global. The RatingDog China General Services Purchasing Managers’ Index rose to 54.4, up from 52.6 in April, indicating expansion in the sector. This growth was fueled by an increase in new business and a resurgence in overseas demand.

Sector Developments

The survey highlighted that new business grew at its fastest pace in three months, supported by improved demand, business innovation, and new client acquisitions. Notably, new export business returned to growth after experiencing a contraction in April.

Service providers responded to the rise in outstanding business by adding jobs for the first time in four months, a positive sign for employment within the sector. However, the sector faced challenges as input cost inflation accelerated to its highest level since October 2024. This was driven by higher oil and fuel prices, increased procurement costs, and rising wages.

Outlook and Confidence

Despite these challenges, business confidence about activity over the coming year remained positive. The Composite Output Index also rose to 54.0 in May from 53.1 in April, reflecting overall growth in the sector.

These developments in China’s services sector are crucial as they contribute significantly to the country’s economic health and global trade dynamics. The ability of service providers to adapt to rising costs while maintaining growth will be key in sustaining this positive trajectory.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.