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China Services Activity Grows at Fastest in Three Months in May, Exceeds Forecasts

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China Services Activity Grows at Fastest in Three Months in May, Exceeds Forecasts

Chinese service activity grew at the fastest rate in three months in May, following a rebound in employment and work backlogs, data from S&P Global and RatingDog showed Wednesday.

The headline RatingDog China General Services Business Activity Index rose to 54.4 from April's 52.6, topping the Investing.com consensus estimate of 52.3.

The reading continued the current expansion trend first seen in January 2023, according to S&P and RatingDog.

New business activity increased halfway through the second quarter, with services demand accelerating for the fourth time in five months, S&P said.

New work sources for the services sector jumped due to higher client demand, business innovation and expansion, new client acquisitions, better market conditions, and new projects, according to S&P.

Incoming new orders also rose for the 41st straight month, which S&P says is the second-longest ongoing growth in the history of the survey.

Business activity forecasts improved to the highest since February and were better compared with the rolling 12-month average.

The boost in new businesses in May was enough to generate another rise in outstanding orders, with work-in-hand increasing for the seventh consecutive month and the steepest since June 2024.

Surveyed firms linked rising expenses to uncertainties in oil and fuel prices, as well as more purchases, higher wages, and other labor costs, S&P said.

Input costs jumped for the 15th straight month, with inflation speeding up the fastest since October 2024, RatingDog founder Yao Yu said in a statement.

Meanwhile, the RatingDog China Composite Purchasing Managers' Index rose to 54.0 from 53.1 in April, marking the fastest growth in overall output since February.

Total new businesses rose the strongest in three months, while outstanding work increased for the fourth straight month, leading to higher employment and recruitment, the report said.

Improved market conditions boosted optimism in the services sector, alongside new projects and a more bullish economic outlook, Yao said.

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