China services activity growth cools in March, private PMI shows

By Liangping Gao and Ryan Woo

BEIJING, April 3 (Reuters) - Growth in China's services activity slowed in March from February's 33-month high, as softer demand and a decline in overseas orders weighed on momentum, a private-sector survey showed on Friday.

The RatingDog China General Services purchasing managers' index, compiled by S&P Global, fell to 52.1 in March from 56.7 in February, remaining above the 50-point mark that separates expansion from contraction.

The reading contrasted with an official survey released earlier this week showing services activity edged up in March, partly because the two surveys cover different samples.

China's economy started the year on a firmer footing with a surge in exports driven by AI-related technology demand, quickening industrial output, and a rebound in retail sales and investment.

But escalating conflict in the Middle East has rattled global trade and energy markets, clouding the outlook for the world's second-largest economy.

China remains relatively well-positioned to endure short-term disruptions from the Iran conflict, said Lynn Song, chief economist of Greater China at ING, in a research note this week, adding "but if higher energy prices and shipping disruptions persist or worsen, we could see pressure build in the months ahead."

New business expanded at the slowest pace since April 2025, while new export orders contracted in March after rising the previous month.

Services firms cut staffing at the fastest pace in six months, citing resignations, retirements, unfilled vacancies and restructuring.

Average input costs in the services sector continued to rise in March, with the sub-index at 50.7 versus 50.9 in February, driven by higher fuel, raw materials and labour costs.

The modest increase in cost pressures allowed service providers to lower prices to help support sales.

Business sentiment for the year ahead remained positive, though it eased slightly from February, the survey showed.

The composite output index, which includes both manufacturing and services activity, fell to 51.5 in March from 55.4 in February.

(Reporting by Liangping Gao and Ryan Woo; Editing by Sam Holmes)