Services activity in China accelerated at the fastest rate in 10 months in May, whilst staffing levels grew for the first time since January, according to the findings from a private sector survey published on Wednesday.

The Caixin/S&P Global services purchasing managers' index (PMI) edged up to 54.0 last month from a reading of 52.5 in April, surpassing the 50-level that divides growth from contraction, and signalling the 17th consecutive month of growth and expanding at the fastest pace since July last year.

Along with the Caixin manufacturing PMI, which reached close to a two-year top, the readings indicate strong growth in business activity throughout May.

That said, additional indicators such as exports, bank lending, and retail sales, which are scheduled to be published, would provide further insights into the momentum of growth.

The Caixin/S&P's composite PMI, tracking both the services and manufacturing sectors, increased to 54.1 in May from 52.8 in April, the highest in a year, Reuters news agency reports.

Furthermore, accelerated inflows of new business supported the growth of services activity. New business expanded at the fastest rate since May 2023, along with new export business.

Last month, extra staff were recruited to tackle the ongoing workload, driving up staffing levels to their highest since September 2023.

Nevertheless, price pressures heightened, with businesses increasing costs amid rising cost burdens.

Moreover, business confidence levels also decreased to a seven-month low due to concerns about the global economic environment and rising prices.  

While China's economy showed a strong start in Q1, leading the IMF and rating agency Moody's to increase their annual growth forecasts, a prolonged property downturn has hindered any significant economic recovery.

According to Nomura analysts: “Growth momentum has remained tepid in general, especially for domestic demand, as developer contract sales remain in deep contraction.”

Yet, in response to the robust export performance, the Japanese investment bank raised its forecast for China's 2024 GDP growth to 4.5% from the previous estimate of 4.3%.