China’s Services PMI Hits Three-Month High in May

China’s services sector expanded at its fastest pace in three months in May 2026, supported by stronger new business and a rebound in overseas demand, a private-sector survey released on Wednesday showed. The RatingDog China General Services Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 54.4 in May from 52.6 in April. The reading stayed above the 50-point threshold that separates expansion from contraction.

The survey pointed to firmer demand conditions, with services firms reporting stronger client interest and new orders. Export demand also improved, with new export business returning to growth after contracting in April.

Service providers increased staffing for the first time in four months, according to the survey, as outstanding business rose. The report described the additional hiring as a response to a pickup in workloads and unfinished orders.

Cost pressures, however, intensified. Input cost inflation accelerated to its highest level since October 2024, driven by higher oil and fuel prices, increased procurement costs and rising wages.

How the private survey compares with official data

The May reading was broadly in line with an official survey released on Sunday, which showed services activity returning to expansion after contracting in April. The two surveys cover different samples, and they can diverge month to month, but both are often used as timely indicators of changes in business activity.

Despite the rise in cost pressures, business confidence about activity over the coming year remained positive, the private survey found. Firms cited expectations for demand to hold up, even as they faced higher input prices.

Composite index also edges higher

A broader measure that combines manufacturing and services also strengthened. The Composite Output Index rose to 54.0 in May from 53.1 in April, indicating overall activity accelerated modestly compared with the prior month.

Investors and policymakers will be watching whether the improvement in new orders and export demand persists in coming months, and whether cost pressures ease from their recent highs.