China’s services sector expanded at its weakest pace in seven months this April, as rising U.S. tariffs and trade uncertainty dampened demand and confidence, according to the Caixin/S&P Global Services PMI.
The index fell to 50.7 from 51.9 in March. Though still in expansionary territory, it marked the softest rise in business activity in nearly a year. The survey highlights growing pressure on smaller, export-oriented firms despite first-quarter growth exceeding expectations due to government stimulus.
New business grew at the slowest rate since late 2022, while export orders rose marginally, partly supported by tourism. However, many service providers reported trade disruptions linked to U.S. tariffs, affecting their operations and outlook.
Business sentiment dropped to its lowest since early 2020, and staffing levels declined for the second consecutive month as companies looked to cut costs. Backlogs of work increased, and firms slashed prices to stay competitive despite rising input and wage costs — with inflation at its highest since January.
The broader Caixin Composite PMI, which tracks both manufacturing and services, slipped to 51.1 in April from 51.8 in March, indicating a general loss of momentum across the private sector.
Analysts warn the full impact of tariffs may intensify in the coming quarters. Economists at Morgan Stanley predict second-quarter growth could slow by up to one percentage point. The Chinese government has pledged to support affected sectors and is expected to implement targeted stimulus, focusing on new industries, urban renewal, and a gradual pivot toward domestic consumption.