(Yicai) March 5 -- China's services activity unexpectedly expanded in February amid positive economic signs, following its lowest point in four months, according to a widely-watched private survey.

The Caixin services purchasing managers' index, which polls small and private businesses, rose to 51.3 last month from 51 in January, data published by financial media group Caixin showed today. A reading above 50 indicates expansion.

The figure is at variance with official data. The National Bureau of Statistics previously released its services business activity index for February, which fell to 50 from 49.7 the month before.

Caixin’s data suggests a rosier picture, with its manufacturing PMI released two days ago having also seen an improvement in February. The gauge read 50.8, up 0.7 percentage point, marking the fifth consecutive month of expansion. As a result, Caixin’s composite PMI rose to 51.5 from 51.1, the highest in three months.

Supply and demand picked up further last month, according to the Caixin services PMI sub-indicators, with new orders rising slightly from just above the halfway mark in the previous month. With external demand warming up, new export orders also returned to growth.

Due to the improvement in supply and demand, service sector employment increased slightly to rebound above the critical threshold, after contracting in the previous two months.

Business confidence rose to its highest level in nearly three months, with the gauge returning to expansion territory. Surveyed companies said they generally expect a broader improvement in the economic environment over the next year.

Despite all these improvements, the economy still faces significant difficulties and pressures, said Wang Zhe, a senior economist at Caixin Insight Group. The uncertainty surrounding jobs and incomes has increased, which is a constraint on further expanding domestic demand and stabilizing the economy, he said.

Supportive polices are expected this month in response to market expectations and social concerns, Wang noted, with a particular focus on the demand side. There should be an increase in counter-cyclical adjustments to promote an increase in household incomes and thereby the willingness to spend, he said.

Editor: Tom Litting