China Services Growth Slows in March but Remains in Expansion
China’s services sector continued to expand in March, although growth slowed compared to the previous month. Weaker demand momentum and ongoing job cuts weighed on overall activity, according to a private survey released on Friday.
PMI Falls From Multi-Year High
The RatingDog Services PMI dropped to 52.1 in March, down from a 33-month high of 56.7 recorded in February. The figure also came in below market expectations of 53.6.
Despite the decline, the index remained above the key 50 threshold that separates expansion from contraction, marking the 39th consecutive month of growth in the services sector.
Domestic Demand Continues to Support Growth
The slowdown follows a particularly strong performance in February. While business activity and new orders continued to increase, the pace of growth moderated.
Survey data showed that domestic demand remained the primary driver of expansion. Growth was supported by new projects, client referrals, and a steadily expanding customer base.
External Demand Weakens
In contrast, external demand showed signs of deterioration. New export orders fell back into contraction territory after recording gains earlier in the year, highlighting ongoing weakness in global demand.
Job Cuts Continue Despite Rising Workloads
Even though new business and backlogs continued to grow, companies reduced staffing levels for the second consecutive month. Firms cited cost control strategies, including restructuring and not replacing departing employees, as key reasons for the cuts.
Pricing Pressures Remain Limited
Cost pressures remained relatively contained, allowing companies to lower selling prices in order to remain competitive. This suggests that inflationary pressures within the services sector are still subdued.
