Growth in China's services sector accelerated to a 16-month high in November, a private survey showed, though the increase in new orders dipped slightly and business expectations moderated.
The survey, along with solid factory activity readings last week, suggest building momentum for China's economy at the end of a year that saw growth stabilize, though economists say an unsustainable rebound in prices is largely responsible for the recent strength.
The Caixin/Markit services purchasing managers' index (PMI) rose to 53.1 in November on a seasonally adjusted basis from 52.4 in October.
A reading above the 50-mark suggests expansion in activity on a monthly basis. The November number marked the highest for the survey since July 2015.
Input prices for services companies rose at the fastest pace since February 2015, with a number of companies surveyed indicating higher commodities prices and wages. However, intense competition limited how much they could pass higher prices along to customers, raising the specter of slimmer profit margins.
A survey of manufacturers last week suggested prices are rising at the fastest pace in over five years, with higher commodity prices contributing to a boost in industrial profits.
The government has said organic growth remains relatively weak, and analysts believe a boost from prices will be short-lived without a corresponding increase in demand.
"(Price pressure) likely reflects currency moves and the bounce in commodity prices. That can't be good for margins. And at time when financial conditions are tightening, this is bound to weigh on investment," HSBC co-head of Asian economics research Frederic Neumann wrote in a note on Friday after the factory PMIs.