China's services sector expanded at its fastest pace in three months in May, supported by stronger domestic demand and a recovery in overseas business, according to a private-sector survey released on Wednesday, as per a report by Reuters.The RatingDog China General Services Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 54.4 in May from 52.6 in April. The reading remained comfortably above the 50-point threshold that separates expansion from contraction, signaling continued growth in the country's services economy.According to Reuters, the latest survey results broadly aligned with official data released earlier this week, which showed that China's services activity returned to expansion territory in May after contracting in April. However, the two surveys track different groups of businesses and therefore may vary in their readings.The survey indicated that new business activity accelerated at the strongest pace in three months. Firms cited improved customer demand, product and service innovation, and the acquisition of new clients as key drivers of growth. Export-oriented services also showed signs of recovery, with new overseas business returning to growth after declining in the previous month.Improving business conditions prompted service providers to increase hiring for the first time in four months. Employment gains were driven by a rise in outstanding workloads as companies sought to meet growing demand.Despite the positive momentum, rising cost pressures remained a challenge for businesses. Input cost inflation accelerated to its highest level since October 2024, reflecting higher oil and fuel prices, increased procurement expenses, and rising wage costs.Even with mounting cost burdens, business sentiment remained upbeat. Companies surveyed expressed confidence that activity levels would continue to improve over the next 12 months, supported by expectations of stronger demand and ongoing business development initiatives.The broader picture of economic activity also improved. The Composite Output Index, which combines manufacturing and services activity, rose to 54.0 in May from 53.1 in April, indicating stronger overall business expansion across China's economy.The latest data suggest that China's services sector is providing a measure of resilience to the economy, even as businesses continue to navigate rising costs and an uneven global demand environment. Sustained improvement in both domestic and international demand will be crucial for maintaining growth momentum in the months ahead.