China's Service Sector Growth Cools Amid Rising Costs

Despite the deceleration, the sector remains in expansion territory, bolstered by a steady influx of new business and a sixth consecutive month of growth in export orders. Firms are actively expanding their payrolls to manage workloads, with job creation figures showing an uptick from the previous month. However, the broader economic picture remains complex as service providers grapple with a five-month high in input cost inflation, driven by more expensive labor, raw materials, and fuel.

Faced with a crowded marketplace, companies have resorted to cutting prices for the second month in a row to maintain their competitive edge. Yao Yu, founder of RatingDog, noted that while the outlook among business owners stays positive, confidence has retreated to a three-month low due to the dual pressure of thinner margins and fierce market rivalry.