Economic activity in the U.S. service sector continued expanding in January, indicating the economy is on track for solid growth, an industry survey showed on Wednesday.

The Non-Manufacturing Index (NMI), which measures activity in the U.S. service sector, rose to 56.7 percent in January, 0.2 percentage point higher than December's reading of 56.5 percent, the Institute for Supply Management (ISM) said in its monthly survey.

The NMI survey covers all sectors outside of manufacturing. A reading above 50 percent indicates expansion of the service sector.

The new orders component of the index, a signal of future business, edged up 0.3 percentage point to 59.5 percent. The component of employment and price decreased.

Eight industries tracked by the ISM reported growth while eight reported contraction.

The NMI index is closely watched because the service sector absorbs about 90 percent of the U.S. workforce, and is a key indicator for the overall health of the economic recovery.