India’s service sector has recorded a strong growth in the month of May recorded its fastest growth in three months, according to widely accepted index of Indian services sector activity.

The HSBC India Services Purchasing Managers Index (PMI) rose to 54.7 in May, it’s highest in three months, compared to 52.8 in April. Experts say that a reading above the mark of 50 indicates expansion of the industry while that below 50 shows contraction.

The figure for May shows an improvement in the volume of work in-hand at the country’s services firms as well as an expansion of the services sector workforce, according to HSBC.

HSBC Chief Economist for India and ASEAN Leif Eskesen said that the increase in HSBC India Services PMI is an encouraging sign in the Indian economy after a weak GDP growth figure was released for the fourth quarter.

India’s GDP growth has fallen to its lowest level in 9 years to 5.3 per cent for the fourth quarter of the financial year till March 2012. The GDP growth for the same quarter of 2010-11 was 9.2 per cent, showed the latest data announced by the company.

"The inflation readings for input and output prices accelerated again and remain high by historical standards," Eskesen said. The country’s input price inflation grew to a strong rate amid reports of higher prices paid for energy, fuel and raw materials.