A private survey on Wednesday revealed that the services sector output in India hit a three-month high in July. The Nikkei Markit India Manufacturing Purchasing Managers' Index, a composite indicator of services performance, rose to 51.9 from 50.3 in June. A reading above 50 denotes expansion, while one below that indicates contraction.

According to the survey, growth of new business helped boost output and the manufacturing sector's better performance also resulted in the upswing of the service sector's output. On Monday, a monthly survey revealed that the manufacturing sector hit a four-month high in July, as it touched 51.8 in the PMI.

Employment, however, did not see any hike in the service sector. Almost all survey members reported the same number of staff as they did in May. It has been over two-and-a-half years since the private sector has seen much job creation, reported The Hindu.

Average input costs declined in July because of lower prices of fuel and other commodities. Conversely, purchasing costs continued to rise, reported Business Standard. Economist and author of the report Pollyanna De Lima said, "Service providers signalled declining price pressures, with output charges being cut in line with an overall decrease in input costs." The demand environment, however, allowed service providers to pass on to their clients part of the additional cost burden.

The growth in manufacturing production coupled with services output also pulled up the seasonally adjusted Nikkei India Composite PMI Output Index to a three-month high of 52.4 in July against 51.1 in June. The industry is now hopeful the Reserve Bank of India reducing key rates, since Raghuram Rajan had also hinted at it during the bank's policy review meet in June. The RBI governor had said if a good monsoon eased inflation, there could be reduction in the key policy rates. The next policy review meet is scheduled to take place on August 9.