A worker checks the dimension of a wheel used in textile machinery inside a factory in the western Indian city of Ahmedabad. Image Credit: Reuters

India’s main services index rose to the highest level in five months in December as improving new work orders helped boost activity in the country’s dominant sector.

The seasonally adjusted Markit India Services PMI index climbed to 53.3 from 52.7 in November, suggesting a strong end to the calendar year. The level was the highest since July.

A reading above 50 means expansion while anything below that signals contraction.

While the pick-up in activity signaled an uptick in business confidence, it was accompanied by a rise in inflationary pressures, the survey showed. That trend may keep monetary policy makers from resuming interest-rate cuts anytime soon.

The Reserve Bank of India slashed rates five times last year to support economic growth, but paused in December citing a surprise surge in inflation.