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) rose to 52.0 in October, up 1.7, standing at a three-month high and indicating a sustained recovery in China's services sector, according to data released on Tuesday.

A reading above 50 indicates expansion in activity, while a number below signals 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 stronger market demand.

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

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

Since late September, 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 said that the impact of incremental pro-growth policies on boosting domestic demand and supporting employment should be closely monitored.

Observers suggested 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 its services sector, especially those segments that are linked to manufacturing. 

The services that support the manufacturing sector are expanding due to growing complexity in the manufacturing 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's improvement, with sectors like artificial intelligence, software and chip design witnessing an obvious acceleration in growth. In recent years, these new growth points have emerged as key support sources for China's economic transition, Bian said.

The services sector could see a 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 services sector, fueling China's broader economy, Bian said.

China's Ministry of Commerce, as part of its ongoing efforts to implement consumer goods trade-in programs and promote high-quality services revival, plans to work 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.