China’s Service Sector Hits Three-Month Growth Peak

The expansion, rising from April’s 52.6 reading, puts the sector comfortably above the 50-point threshold separating contraction from growth. This private-sector data aligns with recent official government reports, reflecting a broader stabilization in domestic activity. Companies are responding to this momentum by hiring staff for the first time since January, a move prompted by a noticeable uptick in outstanding business volumes.

Despite the optimistic demand figures, the underlying financial pressure on firms is tightening. Input costs surged to their highest levels since October 2024, fueled by rising prices for oil and fuel, alongside higher procurement and wage expenses. While these headwinds persist, business confidence for the coming year remains positive, contributing to a rise in the Composite Output Index to 54.0 from April's 53.1.