China's services sector extended an expansion in August, led by an increase in overall new orders and a stronger rise in new export business, reported S&P Global on Wednesday.

The headline China services purchasing managers index (PMI) rose to 53.0 in August, up from 52.6 in July, striking further above the 50-mark that separates growth from contraction, said S&P Global, citing its monthly survey.

The August services sector expansion "thereby extends the current period of growth that began in January 2023," added S&P Global.

Service sector new order growth was strong in August, and "also contributed to another accumulation of outstanding business," advised S&P Global. In August, service sector backlogs expanded for the fifth-straight month, according to S&P Global.

However, citing costs, China's service-sector managers let payrolls erode in the month.

China's service sector faced rising costs in August, but largely elected to hold the line on charges. Average "input costs continued to increase in August on the back of higher wages and raw material costs, according to panelists," reported S&P Global.

But due to competitive pressures, service-sector enterprises held the line on charges, likely indicating thinning margins. The "ongoing pressure on corporate profits could create negative feedback in the long term," advised S&P Global.

Despite possible pressures on margins, service-sector business sentiment "regarding the one-year outlook remained positive," said S&P Global.

The China services PMI was compiled by S&P Global from surveys received from 650 service sector companies from August 12 through August 20.

Also, the composite China PMI for August, a combination of the manufacturing and service sectors, logged at 51.9 in August, up from 50.8 in July, reported S&P Global.