RTTNews | Oct 8, 2021 05:04AM EDT

05:03 Friday, October 8, 2021 (RTTNews.com) - China's service sector recovered in September with renewed and strong increases in both new work and output, survey results from IHS Markit showed on Friday.

The Caixin services Purchasing Managers' Index rose to 53.4 in September from 46.7 in August.

A reading above 50.0 indicates contraction in the sector. With the exception of August's decline, service sector output has risen in each month since May 2020.

The survey showed that firmer market conditions and higher customer numbers had driven the renewed upturn in sales as the COVID-19 situation had improved. However, foreign demand dipped slightly in September.

Firms increased job creation with an intention to increase capacity and also to meet higher demand.

Amid reports of higher costs for staff, transportation and raw materials, average input costs continued to increase in September. Part of firms' higher expenses were passed on to customers, as highlighted by a renewed increase in average output charges.

Predictions that the COVID-19 will be brought under control globally, and that market conditions and client demand will improve, supported optimism towards the 12-month business outlook, the survey showed.

The composite output index rose to 51.4 in September from 47.2 the previous month.

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

It should also find a balance among multiple objectives, such as promoting employment, holding raw material prices stable, ensuring a stable and orderly supply, and meeting targets for controlling energy consumption, Zhe added.

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