(Yicai Global) Sept. 5 -- Activity in China's service sector slowed marginally in August from July due to an uptick in expenses, but still remained at the second-highest level since May 2021, according to the findings of a widely watched private survey.

The Caixin purchasing managers’ index for services stood at 55 in August, a dip of 0.5 percentage point from July, according to data released by financial media group Caixin today.

But the figure is still well above the benchmark of 50 and within expansion territory as customer demand rebounds as restrictions imposed to curb a spate of Covid-19 outbreaks are relaxed, it added.

The data is more robust than that of the National Bureau of Statistics released earlier this month. The official services PMI dropped 0.9 percentage point to 51.9.

In August, costs in the service sector rose to the highest in four months, as labor, raw materials, food and marketing expenses jumped, Caixin said. Service fees, though, have only risen slightly to moderate the impact of the pandemic and to boost business.

Last month’s power shortage caused by the heatwave greatly affected manufacturing output, but had little impact on the service sector, said Wang Zhe, senior economist at Caixin Insight Group.

The economy is still stabilizing after the Covid-19 flare-ups in the first half but the foundation for economic recovery is not sound with a lot of downward pressure, Wang said. Employment is still the focus of attention, he added.

The Caixin PMI for manufacturing, released on Sept. 1, dipped below the 50 mark to stand in contraction territory at 49.5 as Covid-19 outbreaks and an intense heatwave hampered production. As a result, the Caixin composite PMI slid by 1 percentage point from July to 53, the second straight month of declines.

Official data was slightly different. The manufacturing PMI gained 0.4 percentage point to 49.4, and the composite PMI fell 0.8 percentage point to 51.7, according to the NBS.

Editor: Kim Taylor