The services sector business activity index, a composite indicator of sector conditions from CIPS and NTC Research in which an index of 50 indicates no change on the previous month, rebounded to 55.9, after falling to 54.9 in December.

The IT and computing sectors enjoyed the biggest rise in activity, amid an overall increase in trade.

Companies said customer inquiries were up, and more than a fifth of the companies surveyed said new business rose in January.

Although input price inflation was still sharp, the index fell for the second month in a row, to 58.9. Higher labour costs, along with charges for suppliers and raw materials, drove the increase. But recent price falls in fuel and oil-based products dampened growth.

Businesses were more reluctant to take on staff than at any time since last June as they fought to stay competitive.

In the euro-zone, the NTC Research services sector business activity index rose to 53.4, from 52.6 in December and November. France enjoyed the strongest growth, and Germany the weakest.

In the US, the Institute for Supply Management (ISM) report on non-manufacturing business reported a slower rise in activity for January on the previous month. The fall in the business activity index, from 63.1 to 59.2, was accompanied by a fall in backlogs, raising fears that capacity is outstripping new orders.

• Coverage of previous months' services, manufacturing and construction PMI reports is available at http://www.supplymanagement.com/pmi

• More information on the UK and euro-zone PMIs is available at www.ntc-research.com

• The full text of the ISM reports on the US non-manufacturing economy for January and previous months is available at http://www.ism.ws/ISMReport/index.cfm