The services sector growth touched a 13-year high in July as a substantial improvement in demand conditions and pick-up in international sales induced the strongest increase in new business and output, a monthly survey said.

The seasonally adjusted S&P Global India Services PMI Business Activity Index rose from 58.5 in June to 62.3 in July, signalling the sharpest increase in output since June 2010.

For the 24th straight month, the headline figure was above the neutral 50 threshold. In Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion while a score below 50 denotes contraction.

“The resilience of the service sector underscores its vital role in fuelling India’s economy, with the PMI results for July so far pointing to a notable contribution from the sector to overall GDP for the second fiscal quarter,” Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said.

According to survey members, the upturn was largely attributed to demand strength and new business gains.

Demand for Indian services improved to the greatest extent in over 13 years during July, with 29 per cent of survey participants reporting higher intakes of new business.

“The broad increases in sales across the domestic and international markets are particularly welcoming news, especially in light of the challenging global economic scenario. Firms noted a widespread upturn in services exports to several nations including Bangladesh, Nepal, Sri Lanka and the UAE,” Lima said.

On the inflation front, cost pressures intensified and monitored companies signalled greater food, labour and transportation costs.