The service sector has had a strong start to the year, with the Caixin China Purchasing Managers' Index hitting a six-month high in January at 52.4.
The figure marks a significant rebound in services activities from December, when the PMI fell to a 17-month low of 50.2.
The expansion offset the continued decline in manufacturing, and lifted the headline Caixin Composite Output Index, which covers both sectors, to 50.1 points. This means the country's overall business conditions improved slightly in January.
The growth in the service sector was primarily driven by a solid increase in new orders, which grew the fastest in three months.
Manufacturers and services providers continue to diverge on employment conditions, with the former shedding staff and the latter creating jobs more quickly than in each of the previous five months. Overall, however, the combined number of jobs fell for the eighth straight month in January.
Services companies and manufacturers both cut their prices last month. The average cost burden grew again for service providers, but the increase was not as strong as in the previous three months.
"The fast development of the services sector has to a large extent offset the impact of weakening manufacturing, indicating a better economic structure," said Dr. He Fan, the chief economist of Caixin Insight Group.
"The government should continue to deepen reform, relax administrative controls and reduce restrictions on market entry for service providers. This will release the potential of the services sector and help improve the economic structure."
