BEIJING--A private indicator of China's service sector rose to a 14-month high in March due to stronger demand.

The Caixin China services purchasing managers index rose to 54.4 last month from February's 51.1, which was a four-month low, Caixin Media Co. and research firm Markit said in a release on Wednesday.

A reading above 50 indicates an expansion in activity from the previous month, while a level below that points to a contraction.

The rebound in March was mainly driven by improvement in new works, especially in new export orders, which rose at the second strongest rate since December 2017, the release said.

Inflation, however, remained subdued as the gauges for prices charged by service providers edged down, it said.

"More evidence is needed to determine whether the Chinese economy has stabilized," Zhengsheng Zhong, an economist at the CEBM Group said in the release.

Wednesday's data is based on information compiled from monthly replies to questionnaires sent to purchasing executives in over 400 companies.

According to data released by the National Bureau of Statistics on Sunday, China's official nonmanufacturing purchasing managers index, a measure of activity outside factory gates, edged up to 54.8 in March from 54.3 in February. The subindex measuring business activities for the service sector of the official PMI was up a tick to 53.6 in March from 53.5 in February.

Write to Liyan Qi at liyan.qi@wsj.com