Economic Buzz: China services growth slows in March but outlook stays positive
The services business activity index remained above the 50.0 mark at 52.1, down from a 33-month high of 56.7 in February, indicating continued growth since January 2023. Overall activity stayed broadly in line with the average seen since early 2024.
New business rose for the 39th straight month, supported by stronger customer demand, a wider client base, referrals, and new projects. However, the pace of growth was the slowest since April 2025. Domestic demand remained the main driver, while international business declined slightly after earlier gains in 2026.
Backlogs of work increased again, continuing a trend seen since April 2025, although the rise was only modest. Despite higher workloads, companies reduced staffing levels, citing resignations, retirements, restructuring, and not replacing departing workers. Job cuts were the fastest in six months but still mild overall.
Cost pressures remained limited, with only a slight rise in input prices due to higher fuel, raw material, labour, and promotional costs. This allowed firms to lower their selling prices for the third time in four months to support demand.
Business confidence for the year ahead remained positive, though slightly lower than in February, with firms pointing to expansion plans, new projects, and product launches as key drivers.
Meanwhile, the Composite Output Index, which includes both manufacturing and services, fell to 51.5 in March from 55.4 in February. This still signaled overall growth in business activity, though at a slower pace. New business increased across both sectors, while backlogs rose at the fastest rate in six months. Employment declined slightly overall, despite some job gains in manufacturing. Input costs rose at the fastest pace since May 2022, mainly due to higher manufacturing expenses, while selling price inflation eased slightly and remained close to its long-term average.
Powered by Commodity Insights
