(Beijing) – Overall business activity gained steam in March on stronger growth of services sector and a rebound in manufacturing output, new data for the Caixin China Composite Purchasing Managers' Index show.

The Caixin China Composite PMI, which covers both the services and manufacturing sectors, was above the neutral 50.0 mark at 51.3, higher than February's 49.4 – the strongest expansion of overall business activity in 11 months.

The services PMI for March was 52.2 points, up from 51.2 in February.

New orders rose modestly at service providers in March at about the same rate as in the previous month.

However, services firms reduced the number of workers they hired in March, the first shrinkage in employment seen in the sector since August 2013. Adding to the cut manufacturers made, overall employment conditions deteriorated in March at the fastest rate since January 2009.

Service providers saw a further rise in average input costs during March, but the rate of inflation was modest and weaker than in February. But they reported lower selling price, citing greater competition.

"Overall, the services sector developed well, but the economy is riding choppy waves, indicating the lack of a solid foundation for a recovery," said Dr. He Fan, chief economist of Caixin Insight Group. "The government needs to push forward with 'supply-side reform' to encourage the development of emerging industries."