Yasuda International - The latest reading on China's services sector for June has indicated that the mainland's rebalancing away from its reliance on the manufacturing sector is continuing as intended.

The China Caixin services purchasing managers' index (PMI) rose to 52.7 from 51.2 in May, representing the quickest increase in 11 months. Levels above 50 mean expansion, while levels below the 50 level indicate contraction.

Those figures validated the official services PMI data published last week, which showed the services PMI climbed to 53.7 in June compared with May's 53.1 reading. The official data usually tracks larger companies and state-owned enterprises, while the Caixin survey concentrates on smaller, private businesses.

Although the manufacturing PMI data attracts more attention from investors, China's intentional focus on developing domestic consumption at the expense of manufacturing and investment-led growth means that the service sector, which encompasses consumer industries like real estate, retail and leisure, is now the majority of the mainland economy.

“A lot is made of manufacturing PMI even though services actually represent a larger chunk of the mainland’s economy,” said a Yasuda International Asia markets analyst. The services sector is also seen as an important barometer of consumption, accounting for more than 50 percent of gross domestic product (GDP).

Last week’s manufacturing PMI indicated that that part of the economy continued to struggle but Yasuda International says it is less worried about the Chinese economy than it is about the US economy which it believes will flirt perilously close to recession in 2016.