BEIJING, Aug. 28 -- China's small and medium-sized enterprises (SMEs) showed improving business confidence in August as the country's economy is stabilizing amid policy support, a report showed.

The China SME Confidence Index rose to 54.5 in August from 53.8 in July, ending a continous fall for three consecutive months, according to a report from Standard Chartered Bank.

The sub-indices of current performance and business outlook edged up from July. Domestic orders rose and production accelerated gently.

The impact of the country's counter-cyclical policy measures adopted earlier this year seems to have started to feed through to the real economy, as SMEs' expectations of real activity turned benign, pointing to a possible mild recovery later this year, the report showed.

Official data showed Tuesday that the profits of China's major industrial firms rebounded in July with a 2.6-percent year-on-year growth, after falling 3.1 percent in June.

The report pointed out that credit conditions remained a concern for SMEs, adding that the recent loan prime rate reform, making it the new reference rate for loans, should improve interest rate transmission.