In December, a sharp rise in new business growth led to an expansion in India's service sector activity to a five-month high, a survey showed on Monday.
The IHS Markit India Services Purchasing Managers' Index (PMI) rose to 53.3 in December from 52.7 in November. It is the second-strongest rate of increase in output in over a year (after July) and the second straight month that the reading has been above the 50-mark that separates growth from contraction.
"It's encouraging to see the Indian service sector continuing to recover from the subdued performances noted in September and October...the news of sustained job creation, robust new order growth and a pick-up in business confidence suggest that expansion can be maintained in the early part of 2020," said Pollyanna de Lima, Principal Economist at IHS Markit.
"Survey members linked the rise to better market conditions and new business growth," the report also said.
A sub-index that tracks new business climbed to its highest since October 2016, encouraging firms to increase headcount. Service providers were more optimistic about growth in the year ahead and international demand continued to rise.
On Thursday, a sister survey on showed factory activity accelerated at the fastest pace in seven months in December on strong domestic demand and output.
Combined, the manufacturing and services indices pushed the composite PMI to 53.7 last month from November's 52.7, its highest in five months.