The Caixin/Markit survey, which focuses on smaller private firms, followed strong readings of official PMIs, which cover large State-owned companies. China's Caixin Services Purchasing Managers' Index (PMI) increased to 52.0 in October, a rise of 1.7 percentage points and reaching a three-month high.Photo:VCG

China's Caixin Services Purchasing Managers' Index (PMI) increased to 52.0 in October, a rise of 1.7 percentage points and reaching a three-month high, indicating sustained recovery in China's services sector, according to data released on Tuesday.

A reading above 50 indicates an expansion in activity, while a number below signals a contraction.

Supply and demand both grew at a quicker rate in October, as the new orders index rose further into expansion territory, according to the Caixin survey. 

Surveyed companies linked the rise in new business volumes to better market conditions and a stronger market demand.

The manufacturing and services sectors' rising momentum helped raise the Caixin China Composite PMI by 1.6 percentage points in October, to 51.9, marking its highest level since July.

The Caixin China Manufacturing PMl for October stood at 50.3, up by 1.0 percentage point, returning to expansion territory.

Since late September, a series of incremental pro-growth policies have been introduced. Data from the Caixin China Manufacturing and Services PMIs show that market demand has stabilized after a period of decline, market optimism is rebounding, and the effects of these policies are starting to take hold, Wang Zhe, a senior economist at Caixin, said in a statement on Tuesday.

Wang noted that the impact of incremental pro-growth policies on boosting domestic demand and supporting employment should be closely monitored.

Observers suggest that future government policies should concentrate on substantially boosting disposable incomes across a wider demographic to foster a sustained recovery in market demand.

As a manufacturing powerhouse, China has seen rapid growth in service sector, especially those tied to manufacturing. 

The services that support manufacturing sector are witnessing an expansion, due to growing complexity in production process and supply chain extension, Bian Yongzu, executive deputy editor-in-chief of Modernization of Management magazine, told the Global Times on Tuesday.

He noted that high-tech industry development has contributed to the PMI growth, with sectors like artificial intelligence, software, and chip designing witnessing an obvious acceleration in growth. In recent years, these new growth points have emerged as key supporting China's economic transition, Bian said.

The service sector could see sustained recovery as the global economy rebounds and China's pro-growth stimulus policies take effect. The positive cycle could drive further growth in the service sector, fueling up China's broader economy, Bian said.

China's Ministry of Commerce, as part of its ongoing efforts to implement consumer goods trade-in program and promote high-quality services revival, plans to partner with major consumption hubs, including Shanghai, Beijing, and Guangzhou, to launch a consumption promotional initiative in November, People.cn reported on Saturday. The initiative aims to boost the supply of high-quality products and stimulate consumer activity.