China's service sector expanded again in March, with both business activity and new orders increasing at faster rates in the latest survey period. Firms were also optimistic regarding future output.
Staffing levels declined, however, whilst improved efficiency helped to clear backlogs of work. Meanwhile, greater market competition led firms to lower their selling prices in March. This was despite a renewed increase in input costs.
The headline Caixin China General Services Business Activity Index posted 51.9 in March, up from 51.4 in February. Scoring above the crucial 50.0 no-change mark for the twenty-seventh month in a row, the latest reading signalled another expansion of services activity in China. While modest, the rate of growth was the most marked since last December.
The Composite Output Index posted 51.8 in March, up from 51.5 in February, signalling that business activity growth strengthened to the fastest since last November.
This was supported by quicker rates of output growth in both the manufacturing and service sectors. Central to the rise in activity was greater inflows of new business, including new export business.
Backlogs also accumulated for a second straight month. Employment levels declined, however, linked mainly to job shedding in the service sector.
Overall business sentiment remained optimistic, with the level of confidence still above the 2024 average, despite easing since February.
Turning to prices, average charges declined for a fourth straight month as input prices fell at a pace that, though marginal, was the quickest in almost five years.