BEIJING - Business activity in China's service sector continued to expand in July, a private survey showed Wednesday.

The Caixin China General Services PMI (Purchasing Managers' Index) came in at 51.7 in July, down from 52.7 in June, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co Ltd.

A reading above 50 indicates expansion, while a reading below 50 represents contraction.

However, the growth rate retreated from an 11-month high of 52.7 in June.

The deceleration can be attributed to slowing new order growth and falling services employment, with the latter appearing to be the first time in four months. Services companies were downsizing to cut costs, but the overall employment decline was modest.

The surveyed companies saw their unfinished work drop for the second month along with the weakest increase in costs for a year and a half. Prices charged by services providers increased slightly.

Companies still maintained a positive stance toward future business activity with forecasts of improving economic conditions and an expanding market size. The optimism edged up to a three-month high.

The Caixin China General Services PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 companies.

The Caixin General China Manufacturing PMI, an indicator of factory activity, added two points to post 50.6 in July, the first increase since February 2015, according to data released Monday.

The two indices signalled a stronger expansion in Chinese business activity at the start of the third quarter.

Another major Caixin economic indicator, the Composite Output Index, rose from 50.3 in June to 51.9 in July, the fastest rate of growth since September 2014.

China's economy grew slightly faster than expectations in the second quarter of 2016, with its GDP expanding 6.7 percent year on year, official data showed.