(Yicai) Sept. 5 -- Activity in China's services sector expanded at the slowest clip this year last month amid sluggish demand, according to a widely watched private gauge.

The Caixin services purchasing managers' index came in at 51.8 in August, down from 54.1 in July, data released by financial media group Caixin showed today. The figure was 53.9 in June and 57.1 in May. A reading above 50 indicates expansion.

Caixin's services PMI highlights different trends from the benchmark published by the National Bureau of Statistics, but their composite PMI measures are consistent. The official services PMI stood at 51 last month, down from 51.5 in July.

The official gauges are compiled by the government and survey 3,200 firms, most state-owned, whereas the Caixin PMIs track 650 businesses that are generally smaller and privately owned.

Caixin's services business activity sub-index also fell in August to the lowest level this year, with the export orders sub-index coming in below 50.

The manufacturing sector's prosperity index improved a little, the service sector's growth momentum slowed, and the economy still came under downward pressure, said Wang Zhe, senior economist of Caixin Insight Group. Insufficient domestic demand, weakened expectations, and uncertain external demand weighed on the economy, he added.

Stabilizing expectations and lifting household incomes will remain the focus of government policies, Wang pointed out.

The services employment sub-index was basically the same as in July. According to the firms surveyed, jobs growth was supported by increasing business demand coupled with their expansion plans. But the related work backlog was the worst since February because of an increase in new orders.

Service sector costs climbed further last month due to higher expenditure on raw materials, labor, and fuel. But the input price sub-index hit a six-month low.

Growth in the service sector's ex-factory prices also slowed. Firms said they shifted some cost pressures onto consumers, but market competition is still fierce and companies have limited pricing capability.

Corporate confidence in the sector was low, and the business expectation sub-index fell to the lowest since last December but remained in positive territory.

Editor: Martin Kadiev