China’s services activity expanded at the slowest pace in seven months in April, with new orders growth slackening from March, weighed by uncertainty caused by US tariffs, a private sector survey showed on Tuesday, according to a report by Reuters.
The Caixin/S&P Global services purchasing managers’ index (PMI), fell to 50.7 from 51.9 in March, its lowest reading since September. The 50-mark separates expansion from contraction.
This was broadly in line with the official survey, which showed services activity easing to 50.1 from 50.3 in the previous month. The Caixin PMI is considered a better read of trends among more export-oriented and smaller firms.
Despite stronger-than-expected economic growth in the first quarter, supported by government stimulus, China’s economy contends with persistent deflationary risks, a protracted property slump, and threats from US tariffs.
About 48 per cent of employees in China worked in the services industry in 2023 and the sector contributed 56.7 per cent to total GDP last year. But US President Donald Trump’s trade actions may hit the manufacturing sector hard and hurt business hiring plans and consumer confidence.
“With a cloud over the market outlook, both business and consumer confidence are subdued, making it harder to boost domestic demand,” said Wang Zhe, Senior Economist at Caixin Insight Group.
“The ripple effects of the ongoing China-US tariff standoff will gradually be felt in the second and third quarters. As such, policymakers should prepare well and take action sooner rather than later,” said Wang.
