The service sector in China experienced accelerated growth in March, according to survey results from S&P Global released on Wednesday. The growth was driven by an increase in new business and rising business sentiment. There was a slight rise in the Caixin service sector Purchasing Managers' Index (PMI), moving up from 52.5 in February to 52.7 in March. This marked the fifteenth consecutive month of service activity growth.
The pace of business activity growth accelerated primarily due to the new business, which grew at the fastest rate since December of the previous year. Delivery of export business soared to a nine-month high, backed by improved demand and effective promotional campaigns.
Consequently, service providers retained a positive outlook concerning activity over the following twelve months. This improvement was the first noted in three months. However, the sector noted a decrease in employment for the second consecutive month, a result of staff resignations and redundancy processes aimed at increasing productivity.
The service sector recorded softer price pressures with average input price inflation falling below the average of the series. As a result, there was a decrease in the rate of output price growth. The survey revealed that total private sector activity registered the highest expansion since May 2023, with both manufacturing output and service activity doing so at faster rates.
The composite output index increased slightly from 52.5 in February to 52.7 in March. Despite these positive indicators, the economy continues to face challenges, according to Wang Zhe, a senior economist of the Caixin Insight Group. He stated that downward economic pressures, subdued employment, low prices, and insufficient effective demand persist and emphasized the necessity for measures to stimulate both domestic and external demand.
