(Yicai) Aug. 5 -- Activity in China's services sector accelerated its growth pace in July, remaining in expansion territory for the 19th consecutive month, according to a closely-watched private survey.

The Caixin services purchasing managers' index came in at 52.1 last month, up from 51.2 in June, mainly thanks to faster new business growth, data released by financial media group Caixin showed today. A reading above 50 indicates expansion.

In comparison, the official non-manufacturing PMI, published by the National Bureau of Statistics on July 31, fell to 50.2 in July from 50.5 the previous month.

"Incoming new business increased at a solid pace in July, supported by sustained improvements in underlying demand conditions and an expansion in services offerings," Caixin wrote in a press release.

While the export business also expanded, mainly thanks to the rising interest from overseas clients and tourism growth, its expansion rate eased to the slowest in the past 11 months, Caixin noted.

"The labor market shifted from contraction to expansion," said Wang Zhe, senior economist at Caixin Insight Group. "The indicator for employment entered positive territory for the second time in the past six months, registering the highest reading since August 2023.

"Service providers increased their workforce in response to growing market demand, which absorbed some of their existing orders, pushing the gauge for backlogs of work into negative territory," Wang added.

However, market optimism was limited last month. "Some of the surveyed companies expressed confidence in further market improvement while others showed concern," Wang noted. "In July, the gauge for future activity expectations rebounded slightly, and the reading was the second-lowest since March 2020."

The rise in the Caixin services PMI was not enough to offset the 2.3-point decline in the manufacturing PMI, which fell into contraction territory for the first time since October last year in July.

The Caixin composite PMI fell to a nine-month low of 51.2 last month from 52.8 in June. It remained in expansion territory for the ninth consecutive month.

"The services sector saw improvement while manufacturing faced greater pressure," Wang said. "The former outperformed the latter in terms of supply, demand, and employment.

"The most prominent issues are still insufficient domestic demand and weak market optimism," Wang noted. "Therefore, policy efforts should focus on stabilizing growth, improving employment, safeguarding people's livelihood, intensifying policy stimulus, ensuring effective implementation of previous policies, and unleashing market vitality."

Editor: Futura Costaglione