Creating/Managing groups for Outlook.com accounts

I am a new user of Outlook 2013. Before this I was using online Outlook.com and Outlook 2010 in combination with the Outlook Hotmail Connector.

When I installed Office 365, Outlook 2013 seemed to have set everything up fine. However, I want to create a simple contacts group for my email but the button for “New Contacts Group” is greyed out on the Home tab of the People module.

How can I create create a new Contact Group in Outlook 2013?