The Australian Industry Group (AiG) released its services purchasing managers' index (PMI) for Australia on the late Tuesday evening. The index rose to 48.4 in January from 46.3 in December.
A reading above 50 indicates expansion in the sector, while a reading below 50 indicates contraction in the sector.
Four of the five activity sub-indexes were below 50 points in January.
Main contributor to the rise was health and community services sector.