Growth in China's services sector eased in March, slipping from February's 33-month high as weaker demand and fewer overseas orders reduced momentum, a private-sector purchasing managers' survey showed.
The RatingDog China General Services purchasing managers' index, compiled by S&P Global, dropped to 52.1 in March from 56.7 in February. The reading stayed above the 50-point level that distinguishes expansion from contraction.
The private survey's result differed from an official gauge published earlier in the week, which showed services activity edged up in March. The divergence reflects differences in the samples covered by the two measures.
China began the year with firmer economic footing supported by a surge in exports tied to AI-related technology demand, faster industrial output, and rebounds in retail sales and investment. However, the escalating conflict in the Middle East has unsettled global trade and energy markets, clouding the outlook for the world's second-largest economy.
"China remains relatively well-positioned to endure short-term disruptions from the Iran conflict," Lynn Song, chief economist of Greater China at ING, said in a research note this week, adding "but if higher energy prices and shipping disruptions persist or worsen, we could see pressure build in the months ahead."
Within the service sector, new business expanded at the slowest pace since April 2025. New export orders, which had risen the previous month, contracted in March. Firms in the sector reported the fastest pace of staff reductions in six months, citing factors such as resignations, retirements, unfilled vacancies and restructuring.
Input cost pressures in services continued to rise in March, with the sub-index at 50.7 compared with 50.9 in February. Higher fuel, raw material and labour costs were cited as drivers of the increase. The survey indicated that the modest acceleration in costs allowed some service providers to reduce prices in an effort to support sales.
Business sentiment for the coming year remained positive among surveyed firms, although it eased slightly from February's reading. On a broader basis, the composite output index that combines manufacturing and services fell to 51.5 in March from 55.4 in February, reflecting the moderation in activity across the two sectors.
Contextual note: The private PMI provides a snapshot of conditions among the services firms it surveys and should be read alongside other indicators that cover different samples.