China's services activity rises to three-month high, Caixin PMI shows

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New services business growth strongest since December

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Staffing levels decline at quickest pace in nearly a year

BEIJING, April 3 (Reuters) - China's services activity rose to three-month high in March, with both business activity and new orders picking up from February, a private sector survey showed on Thursday.

The Caixin/S&P Global services purchasing managers' index (PMI), rose to 51.9 from 51.4 in February, the highest reading since December.

The result is roughly in line with the official survey, which showed services PMI rose to 50.3 from 50.0.

The activity surveys sent an encouraging sign on China's economic growth in March, which prompted Standard Chartered on Wednesday to revise up its GDP growth forecast for China to 5.2% year-on-year in the first quarter from 4.8%. The bank added that stronger-than-expected activity in January-February was another reason.

However, U.S. President Donald Trump announced on Wednesday that he would impose a 10% baseline tariff on all imports to the U.S. and higher duties on dozens of other countries.

Chinese imports will be hit with a 34% tariff, on top of the 20% he previously imposed, bringing the total new levy to 54%, threatening the growth momentum and strong exports from the world's second-biggest economy.

About 48% of employees worked in China's services industry by 2023 and the sector contributed 56.7% to total GDP last year. But Trump's trade actions may hit the manufacturing sector hard, cloud business hiring plans and damp consumer confidence amid job and income uncertainties. "In 2025, as the external environment becomes increasingly severe and complex, China's macroeconomic policies need to be more proactive and decisive, with measures implemented as soon as possible to support a sustained economic recovery," said Wang Zhe, economist at Caixin Insight Group.

The Caixin services survey showed that new business growth rose to the strongest level since December, stemming mainly from firmer domestic demand, while the volume of new export business was unchanged in March. According to respondents, the new orders were aided by supportive policies, marketing efforts and a broad improvement in demand conditions.

"In 2025, as the external environment becomes increasingly severe and complex, China's macroeconomic policies need to be more proactive and decisive, with measures implemented as soon as possible to support a sustained economic recovery," said Wang Zhe, economist at Caixin Insight Group.

The Caixin services survey showed that new business growth rose to the strongest level since December, stemming mainly from firmer domestic demand, while the volume of new export business was unchanged in March.

Business sentiment in the services sector remained upbeat in March, as panellists hoped that supportive domestic policies and business development efforts will boost sales and output in the next 12 months.

Average input prices rose in March after falling fractionally in the prior month, but average output charges declined at the fastest pace in six months. Services firms opted to absorb any cost increases.

But employment rang an alarm bell, as staffing levels declined at the fastest pace in 11 months. According to respondents, both resignations and redundancies led to the latest fall in employment, with the latter partly driven by cost concerns.

Economic professors from Peking University have called for ramping up support for the services sector to boost consumption, as the current consumer goods trade-in subsidy scheme is too limited. (Reporting by Ellen Zhang and Ryan Woo; Editing by Kim Coghill)