India services PMI jumps to three-month high in Dec: HSBC survey
Services, ranging from banks to restaurants, make up nearly 60 percent of India's economic output and a recovery brightens the outlook for Asia's third-largest economy.
The sector has been the lone bright spot in an otherwise slowing economy.
The HSBC services Purchasing Managers' Index, a survey of around 400 companies, rose to 55.6 in December from November's 52.1.
The 50 mark separates growth from contraction and the index has held above that level for over a year now.
"The service sector provided some holiday cheer with activity fully recovering after two months of deceleration, led by a sharp rise in new business," said Leif Eskesen, economist at HSBC.
The new business sub-index jumped to 57.1 in December from 54.9 in the previous month.
While there is strong overseas demand for Indian services, the big questions remain about major export markets. The U.S. economy will remain sluggish in 2013, underscoring a very fragile world economic outlook, according to a Reuters poll.
Firms were still optimistic about the year ahead, although the business expectations sub-index nudged lower in December from the previous month.
The Indian economy grew 5.3 percent from a year earlier in the quarter to September, extending a slowdown that began at the start of this year. It is now headed for its weakest full year growth in a decade.