China's service sector expanded at a moderate rate in September, a key indicator revealed.

The indicated by 52.4 of the HSBC Services Purchasing Managers' Index stood at 52.4, down from 52.8 in August, the British bank said on Tuesday.

A report from HSBC suggested that the growth in services activity "remained substantially below-trend".

The work backlog for One of the signals to reflect the eased rate was that backlogs of work declined at service providers declined in September.

"But the rate of reduction was only marginal," it said. Besides, service managers expected higher activity levels in the next 12 months. However, some of them were still worried about relatively weak demand in the future that may restrict service business growth, according to the HSBC.

Qu Hongbin, chief China economistt in China at HSBC said: "China's services activity growth appears to be stabilizing at a faster pace than in the second quarter. This led to a renewed expansion of employment from the contraction in August."

"Combined with the gradual improvement of the manufacturing PMI, the Chinese economy is still on the way to a modest recovery. But a more consolidated and sustainable recovery requires structural reforms," he added.