China’s services sector expanded at its fastest pace in three months in May, offering fresh evidence that parts of the world’s second-largest economy are regaining momentum even as manufacturers continue to navigate a challenging external environment and businesses face rising operating costs.

The latest private-sector survey showed service providers benefiting from stronger domestic demand, increased client acquisition efforts, and a recovery in overseas orders, helping drive broader economic activity higher. The results suggest that consumption and services are playing an increasingly important role in supporting growth at a time when policymakers are seeking to reduce the economy’s dependence on exports and property-driven expansion.

The RatingDog China General Services Purchasing Managers’ Index, compiled by S&P Global, rose to 54.4 in May from 52.6 in April, marking the strongest reading since February and remaining comfortably above the 50-point threshold that separates expansion from contraction.

The survey broadly aligned with China’s official non-manufacturing PMI released earlier, which also indicated a return to growth in the services sector after weakness in April. While the official and private surveys cover different groups of companies, the consistency between the two points to a broader improvement in activity across service industries.

A key driver of the improvement was stronger demand. New business expanded at the fastest pace in three months as companies reported improved market conditions, successful business development efforts, and increased customer acquisition. The rebound is notably weighty because weak consumer confidence and cautious household spending have been among the biggest obstacles to China’s economic recovery in recent years.

Another encouraging sign was the return of growth in export business. New overseas orders increased after contracting in April, suggesting that demand from international clients is showing signs of stabilization despite lingering geopolitical tensions and trade uncertainties. For policymakers concerned about slowing global growth and trade frictions, the improvement in export-related services activity provides a measure of relief.

The stronger flow of orders also had a positive effect on employment. Service providers increased hiring for the first time in four months as firms sought additional staff to manage growing workloads and rising backlogs of unfinished business. Employment growth remains an important indicator because China’s leadership has repeatedly emphasized job creation as a central objective of economic policy.

The survey’s employment component may ease concerns about labor market weakness, particularly among younger workers, an issue that has weighed on consumer confidence and household spending.

However, the report also highlighted a growing challenge for businesses: rising costs.

Input prices increased at the fastest pace since October 2024, driven by higher fuel and oil costs, increased procurement expenses, and rising wages. The acceleration underlines the impact of higher global energy prices, which have become a growing concern following tensions in the Middle East and disruptions to energy markets.

The resurgence in cost pressures presents a difficult balancing act for businesses. While stronger demand supports revenue growth, higher operating expenses can squeeze profit margins, particularly if companies are unable to pass those costs on to customers.

For policymakers, the data reinforces a broader picture of an economy experiencing an uneven recovery. Manufacturing has faced periodic weakness due to soft external demand and trade frictions, while services have increasingly become a pillar of growth. The resilience of the services sector is especially important because it is generally more labor-intensive than manufacturing and can provide stronger support for employment and household incomes.

The broader Composite Output Index, which combines manufacturing and services activity, rose to 54.0 in May from 53.1 in April, indicating that overall business activity continued to strengthen.

Looking ahead, business sentiment remained positive, with service providers expressing confidence about activity over the next 12 months. That optimism reflects expectations that policy support measures, improving demand conditions, and ongoing business expansion efforts will continue to underpin growth.

Still, economists will be watching whether rising input costs, geopolitical tensions, and uneven consumer spending begin to undermine that confidence. The sustainability of China’s recovery increasingly depends on whether stronger demand can be maintained without triggering a new wave of inflationary pressures or margin compression across businesses.

For now, the May survey suggests China’s services sector remains one of the brighter spots in the economy, helping offset weaknesses elsewhere and providing a measure of stability.

Hermes Launches Desktop App for Its Agent Framework

The artificial intelligence industry continues to evolve at a remarkable pace, with developers and businesses increasingly seeking tools that can automate complex tasks and streamline workflows. In this rapidly changing environment, Hermes has taken a significant step forward by launching a desktop application for its agent framework.

The move represents an important milestone in the development of AI-powered agents, making advanced automation capabilities more accessible to developers, enterprises, and everyday users. AI agents have emerged as one of the most promising areas within artificial intelligence. Unlike traditional chatbots that primarily respond to prompts, AI agents are designed to perform actions, make decisions, and complete multi-step tasks autonomously.

They can interact with software, access data, coordinate workflows, and execute commands with minimal human intervention.

As demand for these capabilities grows, companies are racing to build platforms that make agent deployment more practical and user-friendly. The launch of Hermes’ desktop application reflects this broader trend. By providing a dedicated desktop environment, Hermes aims to simplify the process of creating, managing, and deploying AI agents.

Users no longer need to rely solely on browser-based interfaces or complex command-line tools. Instead, they can access a more integrated and streamlined experience directly from their computers. One of the most significant advantages of a desktop application is improved accessibility. Developers often work with multiple tools simultaneously, including code editors, databases, APIs, and testing environments.

A desktop-based agent framework allows these workflows to be consolidated into a single platform, reducing friction and increasing productivity. This can help teams move from experimentation to deployment more efficiently. The desktop app may also offer enhanced performance and reliability. Local applications can often provide faster response times and deeper integration with operating system features compared to web-based alternatives.

This can be particularly valuable for AI agents that need access to files, local resources, or specialized software applications. By bringing these capabilities into a desktop environment, Hermes creates opportunities for more sophisticated automation use cases.

Another key benefit is the potential for greater customization. AI agents are rarely one-size-fits-all solutions. Different organizations have unique workflows, security requirements, and operational goals.

A desktop application can provide users with greater control over configurations, integrations, and agent behavior, allowing them to tailor the framework to their specific needs. The timing of the launch is noteworthy. The AI agent market has become one of the hottest segments in technology, attracting significant investment and attention from both startups and established firms.

Companies are increasingly looking beyond simple conversational AI and toward systems capable of executing tasks independently. From software development and customer support to research and data analysis, autonomous agents are expected to transform how work gets done across industries.

For Hermes, the desktop app serves as both a product expansion and a strategic positioning move.

By lowering the barriers to entry and improving the user experience, the company can attract a broader audience while strengthening its ecosystem. A robust desktop platform may also encourage community contributions, plugin development, and third-party integrations that enhance the framework’s overall value.

As AI agents continue to mature, tools that make them easier to build and manage will become increasingly important. Hermes’ desktop application represents a step toward a future where intelligent agents are seamlessly integrated into everyday workflows.

Whether for individual developers, startups, or large enterprises, the launch highlights the growing importance of practical AI infrastructure in the next generation of software development and automation.

Applied Aerospace & Defense has raised $650 million in its U.S. initial public offering, becoming the latest beneficiary of a powerful wave of investor interest in defense and aerospace companies as geopolitical tensions reshape capital markets.

The Huntsville, Alabama-based contractor priced 32.5 million shares at $20 each, placing the offering squarely within its marketed range of $18 to $21 per share. The successful debut underscores how defense-linked companies are emerging as one of the strongest themes in the IPO market, attracting investors eager to gain exposure to rising military spending, missile defense programs, space technologies, and next-generation battlefield systems.

The listing comes at a time when public markets have become increasingly receptive to companies positioned around national security priorities. The ongoing U.S.-Israeli conflict involving Iran, growing competition between the United States and China, and NATO members’ commitments to expand defense budgets have created a favorable backdrop for firms supplying critical aerospace and military technologies.

Applied Aerospace & Defense was formed last year through the combination of Applied Aerospace and PCX Aerosystems by private-equity firm Greenbriar Equity Group. The merger created a larger supplier with exposure to some of the fastest-growing segments of the aerospace and defense market.

The company manufactures a broad range of mission-critical components used in military aircraft, missile systems, space vehicles, and propulsion platforms. Its portfolio includes fuselage structures, flight-control surfaces, solid rocket motor cases, and engine shafts, products that sit deep within defense supply chains and are often difficult to replace once qualified for major programs.

Its customer roster highlights the strategic nature of its business. The company supplies components to major industry players, including Anduril Industries, Boeing, and GE Aerospace.

The IPO comes when defense technology firms that previously relied on venture capital or private-equity funding are increasingly turning to public investors as governments boost procurement spending and investors search for sectors with strong long-term growth visibility.

Recent listings by aerospace parts manufacturer Arxis, drone producer AEVEX, and radio-frequency intelligence company Hawkeye 360 are among the latest examples of how defense-focused issuers are seeking to capitalize on favorable market conditions.

What makes the current environment particularly attractive for defense contractors is the growing emphasis on replenishing military inventories. The wars in Ukraine and the Middle East have highlighted shortages of missiles, munitions, and critical aerospace components, prompting governments to sign multi-year procurement contracts and invest heavily in expanding industrial capacity.

That trend is creating opportunities not only for prime contractors but also for suppliers further down the value chain. Companies that manufacture structural components, propulsion systems, and specialized aerospace parts are benefiting from efforts to strengthen domestic supply chains and reduce dependence on foreign manufacturing.

Investors are also viewing defense technology through a broader lens. Rather than focusing solely on traditional weapons manufacturers, capital is flowing toward companies involved in autonomous systems, drones, missile technologies, space infrastructure, advanced manufacturing, and military artificial intelligence.

Applied Aerospace appears positioned at the intersection of several of these themes. Its products support both defense and space applications, sectors expected to see sustained spending growth over the coming decade.

The company’s successful offering also provides a potential benchmark for other private-equity-backed defense businesses considering public listings. Strong demand could encourage additional aerospace suppliers and military technology firms to accelerate IPO plans while investor appetite remains elevated.

Morgan Stanley and Jefferies served among the lead underwriters for the transaction. Applied Aerospace & Defense is expected to begin trading on the New York Stock Exchange under the ticker symbol AADX.

The IPO’s performance in the coming weeks is anticipated as a gauge of investor appetite for defense-industrial names. If shares trade strongly, it could further reinforce the view that national security and defense technology have become one of the market’s most durable investment themes, even as uncertainty persists across other sectors of the economy.