Bangalore: Growth in services activity picked up pace in September as order books filled up at a faster rate, a business survey showed on Tuesday.
The HSBC Services Purchasing Managers` Index (PMI), compiled by Markit, rose to 51.6 in September from 50.6 in August, reversing a slowdown seen in the previous two months.
A reading above 50 signifies growth while anything below denotes contraction.
The new business sub-index climbed to 52.4 from 51.9, signalling robust demand.
"Service sector activity bottomed out in September thanks to stronger new business flows," said Frederic Neumann, co-head of Asian economic research at survey sponsor HSBC.
In what might also give some respite to an economy that has long struggled with high inflation, the sub-index measuring output price growth fell to a near four-year low.
India`s annual consumer price inflation eased in August to 7.80 percent from 7.96 percent in July. Wholesale prices also rose at a slower clip during that month.
But the Reserve Bank of India doesn`t appear to be in a hurry to ease monetary policy and hinted last week that it won`t do so until it is confident that consumer inflation can be reduced to a target of 6 percent by January 2016.
Activity in the private sector has expanded steadily since May, when Prime Minister Narendra Modi won a landslide mandate that created a wave of optimism over India`s economic prospects.
But the lack of sweeping reforms by Modi`s government so far has taken the sheen off those hopes.
The survey showed firms` confidence regarding future business grew at the slowest pace in a year last month.
"A pick up in reform effort is sorely needed to put growth on a firmer footing and address supply side risks to inflation," Neumann said.