Growth in India’s services activity rose at its fastest pace in 19 months in January as demand picked up, a business survey showed today.

The Nikkei/Markit Services Purchasing Managers' Index (PMI) surged to 54.3 in January from December's 53.6, marking a seventh month above the 50-level that separates growth from contraction.

Growth was noted in four of the six monitored categories, the exceptions being Hotels & Restaurants and Transport & Storage.

“The Indian economy shifted into a higher gear in January, supported by a quick rebound in manufacturing production following last month's floods. Concurrently, the service sector gained traction and posted its strongest monthly gain in activity for over one-and-a-half years,” said Pollyanna De Lima, economist at Markit.

With threats of a sharp slowdown in Asia's third-largest economy, the government may run a higher budget deficit to stimulate demand.

Services input costs increased further in January, marking a four-month sequence of inflation. Purchase costs faced by manufacturers also increased for the fourth consecutive month, but at a moderate and slower rate.

The PMI survey showed December was not very different for job creation compared to previous months. Indeed, the employment sub-index has more or less hovered around the 50-mark throughout 2015. However, higher workloads encouraged service providers to hire additional staff in January, following stagnation in the prior month.

Nevertheless, the rate of job creation was only fractional. Meanwhile, manufacturing jobs rose at a marginal rate.

India's manufacturing PMI had also jumped to a four-month high in January thanks to stronger demand. Firms hired more people to keep up with the production demand.



However, investment goods output and new orders fell in the same period, raising concerns about future manufacturing growth.

"A strong upturn in new business is an especially positive note from January's survey, which underpins hopes for further growth of activity across the country's private sector in the near-term." De Lima said.

The Nikkei India Composite PMI Output Index climbed from 51.6 in December to an 11- month high of 53.3 in January.