BEIJING - China's service sector regained strength in January based on increased demand, according to a private analysis released on Wednesday.

Following a survey sponsored by Caixin Media, financial information service provider Markit put the purchasing managers' index (PMI) for services at 52.4 in January, up from a 17-month low of 50.2 in December.

A reading above 50 indicates expansion, while anything below that means contraction.

The expansion was underpinned by inflows of new business accelerating to their strongest in three months, according to the report.

Respondents said sales were lifted by new product launches and rising underlying customer demand.

The pace of job creation at service providers quickened to a six-month high, with some firms planning company expansion.

The report showed service providers were generally optimistic about business in the coming year, with the overall degree of positive sentiment rose to its highest level since July 2015.

The Caixin China Composite PMI, which covers both manufacturing and services, edged up to 50.1 in January from 49.4 in December, signalling a stabilization of business activity.

"Overall, the fast development of the services sector has to a large extent offset the impact of weakening manufacturing, indicating a better economic structure," said He Fan, chief economist at Caixin Insight Group.

He suggested the government continue to deepen reforms, relax administrative controls and reduce market entry restrictions for service providers to release the sector's potential.