(Bloomberg) -- China’s services activity expanded at the slowest pace in eight months in June, a private gauge showed, a slowdown that may add to worries over the economy’s outlook.

The Caixin China services purchasing managers’ index was 51.2 last month, according to a statement released by Caixin and S&P Global Wednesday. That slowed from 54 in May — a 10-month high — and was worse than what economists expected in a Bloomberg poll. A reading above 50 points to expansion.

The slowing growth of the services sector could add to worries over the prospects of the Chinese economy. The country’s housing market continued contracting despite stepped-up government policies to support it, while deflationary pressure lingers as business and consumer confidence remains sluggish.

“The growth momentum weakened compared to May,” said Wang Zhe, senior economist at Caixin Insight Group, in the statement. “The market was concerned about downward pressure on the economy.”

A sub-gauge of confidence among service providers eased to the lowest level since March 2020 due to rising competition and expectations of softer economic conditions dampening activity in the year ahead, according to the statement. Firms were also cautious about hiring additional staff, it added.

The Caixin reading was stronger than official data published over the weekend also showing the industry continued to expand in June, albeit at the slowest pace in five months. The private survey focuses on smaller firms compared to the official poll. 

Survey results published Monday by Caixin and S&P Global indicated expansion at Chinese factories accelerated to a three-year high, diverging again with official numbers pointing to contraction. But manufacturers’ expectations for future output fell to the lowest since late 2019 due to concerns over competition and the economy’s outlook.

(Updates with details.)

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