BEIJING, Feb. 14 -- China's small and medium-sized enterprises (SMEs) reported an improvement in business performance in January, an industry index showed Wednesday.

The Small and Medium Enterprises Development Index, based on a survey of 3,000 SMEs from eight major industries, came in at 89.2 last month, up from 89 in the previous month and higher than the reading of a year earlier, according to the China Association of Small and Medium Enterprises.

The increase was a result of accelerated production at the beginning of the year and warming consumer demand ahead of the Spring Festival, the association said in a report.

Stepped-up pro-growth policies have bolstered companies' confidence in the future, it said. The sub-index measuring SMEs' confidence in the macroeconomy stood at 98.8, up from 98.5 in the previous month.

Recovering domestic demand ahead of the festival helped increase the sub-index for market vitality to 81.2 from 80.8 a month earlier, according to the report.

Despite improved market demand and sales, SMEs continue to face high costs, the report noted.

The index contains multiple sub-indexes to gauge the performances and expectations of SMEs. A reading above 100 reflects an upward trend in business, while a reading below 100 indicates dented vitality.