China’s services sector activity rose to a three-month high in March, with the Caixin/S&P Global Services PMI climbing to 51.9, up from 51.4 in February. The improvement was driven by stronger domestic demand and a pickup in new business, marking the fastest pace of growth in new orders since December.
The data aligns broadly with the official PMI, which showed a smaller rise to 50.3 from 50.0, and adds to signs of a modest recovery in the world’s second-largest economy.
However, concerns are mounting over the impact of new U.S. trade tariffs, with Trump announcing a 10% baseline tariff on all imports and a 54% total levy on Chinese goods, raising risks for exports, investment, and business confidence. Analysts warn that these measures could dent China’s manufacturing sector and weaken job prospects in the broader economy, particularly in services, which employs nearly half of the national workforce and contributes more than 56% of GDP.
Despite solid demand, the services sector saw the sharpest drop in employment in nearly a year, as businesses cut staff due to resignations and cost-related layoffs. Input costs rose, but service providers held off on raising prices, leading to a steepest fall in output charges in six months.
Business sentiment remains generally positive, with firms hopeful that domestic policy support will help sustain growth. Still, economists are calling for more proactive and decisive policy measures to counter growing external pressures and support the ongoing recovery.