Clocking its highest growth in the last two years, the services sector has recorded a nine per cent increase in sales during the quarter-ended June 2003, a leading economic think-tank said on Monday.

Outstanding investments envisaged in the manufacturing sector increased by 9.5 per cent by July 2003 compared to such investment during the year-ago period, Centre for Monitoring Indian Economy said in its monthly review.

This surge, which is led by steel and automobiles, is expanding in the infrastructure sector, excluding power.

Listed Indian companies performed quite well during April-June 2003 with sales growing by 10.4 per cent and post tax profits rising by 56 per cent, the CMIE said.

The manufacturing companies' sales growth was 10.5 per cent and their profits were up by 95.5 per cent, it said adding, the focus on restructuring and saving costs led to a 10 per cent increase in expenses of the manufacturing sector.

Expenses in the corporate sector rose at a much higher rate of 19 per cent resulting in subdued growth in PBIDT (profit before tax, interest, depreciation and tax) at a mere 7.3 per cent, it said.

The VRS expenses in both manufacturing and services sectors increased substantially during June-April period.

The Index of Industrial Production grew by 5.7 per cent in June 2003 as compared to 4.5 per cent increase in June 2002.