BEIJING, May 6 Reuters China39;s services activity expansion slowed a touch amid rising costs, but growth in new orders accelerated and business sentiment rose solidly in a boost to hopes of a sustained economic recovery, a private sector survey showed on Monday.

The CaixinSP Global services purchasing managers39; index PMI eased to 52.5 from a 52.7 in March, remaining in expansionary territory for the 16th straight month. The 50mark separates expansion from contraction.

The world39;s secondlargest economy grew faster than expected in the first quarter but it is still facing a host of challenges including a prolonged property slump and lacklustre domestic demand.

The strong start to the year is consistent with the Caixin manufacturing and services PMIs, which have remained in expansionary territory for several straight months, said Wang Zhe, Senior Economist at Caixin Insight Group.

Overall new business hit the highest since May last year, while better overseas demand and growth in tourism activity helped propel growth in new export orders to their fastest pace in ten months.

That in turn helped lift business confidence among Chinese service providers in the 12 months ahead to the highest this year.

Companies did continue to face some cost pressure, with input price rises for material, labour and energy though the uptick remained below the longrun survey average. That led firms to increase prices charged to their customers, while they remained reluctant to fill…