China Services PMI Hits Three-Month High as New Orders and Hiring Improve

China’s services sector showed signs of renewed momentum in January, expanding at its fastest pace in three months as stronger new orders lifted activity and pushed hiring to its highest level since mid-2025, according to a private-sector survey released on Wednesday. The latest data adds to cautious optimism about China’s economic outlook at the start of the year, even as challenges remain.

The RatingDog China General Services Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 52.3 in January from 52.0 in December. This marked the strongest reading since October and remained comfortably above the 50-point threshold that separates expansion from contraction. The improvement was driven mainly by a pickup in new business, including export-related orders supported by new product launches.

When combined with manufacturing data, the results point to a tentative recovery for some Chinese businesses. The Composite Output Index, which tracks overall activity across manufacturing and services, increased to 51.6 from 51.3 in December. However, these private-sector readings differ from official surveys, which indicated slowing momentum in both factory output and services activity. Analysts at Barclays noted that while policy support has been front-loaded, it may be insufficient so far or may still require time to boost confidence and real economic activity.

Rising workloads prompted service providers to increase staffing levels in January, hiring more full-time and temporary workers. Although modest, this marked the first increase in employment since July last year. At the same time, cost pressures eased, with average input costs rising more slowly. Output prices declined as some firms cut charges to stimulate demand and support sales growth.

Business sentiment remained positive overall, with companies expecting expansion plans and improved market conditions to support sales this year. However, confidence slipped from December and stayed below the 2025 average, reflecting concerns over the global economic environment.

Looking ahead, RatingDog founder Yao Yu said consumption-driven services such as tourism, culture, catering, and instant retail are likely to benefit from the extended nine-day Spring Festival holiday. In contrast, producer services may face a seasonal slowdown due to factory closures. Data from Tujia showed homestay bookings jumped 48% week-on-week from January, with mid-February emerging as the most popular travel period. Authorities expect a record 9.5 billion passenger trips during the 40-day Lunar New Year travel rush, underscoring the potential boost to consumer services activity.