(Yicai Global) Jan. 4 -- Activity in China's service sector nudged higher in December to a six-month high, according to a private gauge, after a sharp rebound the month prior and in stark contrast with a contraction in manufacturing.

The Caixin Services Purchasing Managers' Index gained 0.1 point to 53.9 last month, London-based data provider IHS Markit, which produces the index with China's Caixin Insight CEBM Group, said online today. That is well above the 50 mark that separates expansion from contraction. In October the index had dropped to a 13-month low.

After years in which Beijing has steered the country toward a growth model focused more on domestic-driven services and private consumption, services account for more than half of China's economy. Its performance has now diverged from that of the industrial sector, although general economic activity picked up last month.

Manufacturing contracted for the first time in 19 months in December, according to another Caixin survey. Released two days ago, the Caixin China General Manufacturing PMI fell to 49.7, slipping below 50 for the first time since June 2017. The official manufacturing PMI, released by the National Bureau of Statistics on Dec. 31, dipped under 50 for the first time since 2016.

The Caixin Composite PMI, which covers both sectors and was released today, grew 0.3 point to a five-month high of 52.2, IHS Markit said, adding that this suggests overall economic activity grew faster in December.

The new business services sub-index fell slightly after a major rebound in November, said Zhong Zhengsheng, head of macro research at Caixin. Demand remained stable while the employment index sank further, though it remained above 50, he added. This suggests the service sector is losing its ability to create jobs, Zhong said.

The indexes for charging price, input price and business activity expansion each gained, indicating an improvement in business expectations, Zhong said.

The composite new order index fell significantly, he said, adding that this implies a slowdown in demand. The export order index increased, which suggests weakening domestic demand, Zheng continued, pointing out that the composite employment index also fell. The input and output price indexes both fell, too, he added, saying forecasts for the future output index suggested waning entrepreneur confidence.