China Services Activity Accelerates in April, Private PMI Shows
China’s services sector expanded at a faster pace in April, supported by stronger domestic demand and improving new business activity, according to a new private-sector survey released on Wednesday.
The S&P Global-compiled RatingDog China General Services Purchasing Managers’ Index rose to 52.6 in April from 52.1 in March.
The reading remained above the key 50-point level, which separates economic expansion from contraction.
Private PMI Contrasts With Official Data
The latest private-sector survey contrasted with official Chinese PMI data released last week, which showed the country’s services activity slipping back into contraction territory after briefly expanding in the previous month.
The difference between the two reports is largely due to the different groups of companies included in each survey.
Despite the stronger services reading, several parts of China’s broader economy continue to show signs of slowing momentum.
China Faces Pressure From Weak External Demand
China’s export sector has recently shown signs of weakness, while retail sales and industrial production growth have also cooled.
At the same time, producer prices have started rising again after years of deflation, increasing pressure on companies already struggling with weak demand and limited pricing power.
Analysts warn that higher costs could squeeze profit margins for Chinese businesses, particularly as consumers and companies remain cautious with spending.
Middle East Conflict Adds Economic Uncertainty
Geopolitical tensions in the Middle East have also added fresh uncertainty to the global economic outlook.
Rising concerns over supply chains, energy prices, and global demand are creating additional challenges for Chinese firms already facing softer export orders.
According to the survey, input cost inflation accelerated to its highest level of the year in April.
Companies cited rising oil, fuel, and freight costs linked partly to the ongoing Middle East conflict.
To remain competitive and retain customers, many service-sector firms continued lowering selling prices for the second consecutive month.
Domestic Demand Supports Growth
The survey showed that new business activity improved during April, driven mainly by stronger domestic demand inside China.
However, new export business declined for a second straight month, although the pace of decline remained relatively modest.
Employment in the services sector also weakened, with companies cutting staffing levels for a third consecutive month.
Businesses cited retirements, employee resignations, and broader cost-cutting efforts as key reasons behind the decline in hiring.
Business Confidence Remains Positive
Despite ongoing economic pressures, business confidence among Chinese service providers remained positive regarding the outlook for the next 12 months.
China’s Composite Output Index, which combines manufacturing and services activity, climbed to 53.1 in April from 51.5 in March.
The index also remained above the 50-point threshold, signaling continued overall economic expansion.
