China's service activity rebounds in Sept: Caixin

China's service sector returned to growth in September as the resurgence in local COVID-19 cases abated and boosted supply and demand in the sector, a private survey said on Friday.

The Caixin China General Services Purchasing Managers' Index came in at 53.4 last month, up from 46.7 in August, indicating a renewed and strong increase in service activity, media group Caixin said in a report on Friday.

A PMI reading above 50 signals expansion in activities, while one below points to contraction.

The improved pandemic control situation has prompted a solid rise in sales and output across the sector, which in turn drove the employment measure into expansion territory in September, the report said.

The gauge of business expectations rose further in the expansion territory last month, though still below its long-term average, with surveyed enterprises showing strong confidence that the pandemic will continue to be effectively controlled, the report said.

Nevertheless, input and output prices both went up in the sector last month amid climbing labor, freight and raw material costs, pointing to the hidden threat of inflation, according to the report.

"In the coming months, the government should focus on improving pandemic control and alleviating supply-side pressure," said Wang Zhe, senior economist at Caixin Insight Group.

"It should also find a balance among multiple objectives, such as promoting employment, keeping raw material prices stable, ensuring a stable and orderly supply, and meeting the targets for controlling energy consumption," Wang said.