The UK’s service sector grew at its quickest pace in nearly a year this June, driven by a rise in new business orders, according to fresh data released on Thursday.

The S&P Global UK Services Purchasing Managers’ Index (PMI) rose to 52.8 in June, up from 50.9 in May and above the preliminary estimate of 51.3. This marked the strongest performance since August 2024 and moved further above the 50-point threshold that separates growth from contraction—though it remained below the long-term average of 54.3.

S&P Global said the upturn was supported by organic sales growth, as both business and consumer spending showed signs of recovery. However, some firms still faced challenges due to weak domestic conditions, U.S. tariffs, and global geopolitical tensions.

New business volumes saw a slight rise for only the second time this year. Despite the growth, employment in the service sector continued to decline, with staffing levels falling for the ninth consecutive month.

The broader UK Composite PMI, which includes both services and manufacturing, climbed to 52.0 in June from 50.3 in May, also beating the flash estimate of 50.7.

Earlier this week, S&P Global reported that UK manufacturing PMI edged up to 47.7 in June, from 46.4 in May, but remained in contraction territory.

“June data pointed to a modest rebound in the service sector, thanks to a recovery in domestic spending following a sluggish spring,” said Tim Moore, economics director at S&P Global Market Intelligence. “Still, rising payroll costs are keeping businesses cautious about hiring. Job numbers dropped again, mainly due to redundancies and unfilled voluntary departures.”

Moore added that with inflationary pressures easing and continued employment declines, the Bank of England may have room to cut interest rates at its next meeting in August.

The PMI data is based on responses from around 650 UK service sector companies, gathered between June 12 and 26. Photo by Joseolgon, Wikimedia commons.