New Delhi, Aug 3 (IANS): Favourable demand conditions accelerated the growth of India's service sector in July, key economic data showed on Friday.

Accordingly, the seasonally adjusted Nikkei India Services Business Activity Index rose from 52.6 in June to 54.2 in July, the strongest rate of output growth since October 2016.

Economic Affairs Secretary Subhash Chandra Garg said the numbers were "indicative of excellent expansion in business activity and optimism in India".

"Strongest expansion in Nikkei India Services Business Activity Index since October 2016. Index rise from 52.6 to 54.2. Composite Output Index also rose from 53.3 in June to 54.1 in July. (This is) indicative of excellent expansion in business activity and optimism in India," he tweeted.

An index reading of above 50 indicates an overall increase in economic activity and below 50 indicates an overall decrease.

"July data was encouraging as the service sector observed the best performance since October 2016, underpinned by the strongest gain in new orders since June 2017," Aashna Dodhia, Economist at IHS Markit and author of the report, said in a statement.

"In response to strong underlying demand conditions, job creation picked up to the fastest since April."

Consequently, the seasonally adjusted Nikkei India Composite PMI Output Index rose from 53.3 in June to 54.1 in July, driven by output growth in both the manufacturing and service sectors.

As per the report, the latest rise in overall output was marked and the strongest seen since October 2016.

"Marked expansions in both the manufacturing and service sector, with stronger growth in the latter, powered the fastest improvement in overall operating conditions in the economy since October 2016," Dodhia said.