Britain’s powerhouse service sector bounced back last month posting its strongest growth of the year (Reuters)

Britain's powerhouse service sector bounced back in March, posting its strongest growth of the year.

The closely-watched Markit/CIPS UK Services Purchasing Managers' Index (PMI) lifted to 55.0 in March from 53.3 the month before, the fastest expansion since December and above economists' expectations of a 53.4 mark.

This a sharp rebound from February, when the sector reported a five-month low.

The survey said firms put the growth down to "supportive UK economic conditions and greater client demand".

However, the slump in the value of the pound since Brexit continues to push up import prices, with business costs rising at the steepest rate since September 2008.

The service sector accounts for around three-quarters of UK economic activity, covering everything from shopkeepers to bankers.

The report also follows disappointing manufacturing and construction PMI data earlier this week, which suggests Britain's economy is slowing down at the end of the first quarter.

IHS Markit chief business economist Chris Williamson said: "The survey data indicate that UK business activity growth regained some momentum after having slipped to a five-month low in February, but the upturn fails to change the picture of an economy that slowed in the first quarter.

"The relative weakness of the PMI survey data compared to that seen at the turn of the year suggests the economy will have grown by 0.4% in the first quarter, markedly lower than the 0.7% expansion seen in the fourth quarter of last year."

The report said consumer-facing businesses suffered the worst performance in the period, such as restaurants, gyms and hairdressers. The best performers in the period was financial services.

IHS Markit chief UK & European economist Howard Archer said: "While the services purchasing managers' survey showed welcome, clear improvement in March after hitting a five-month low in February, the overall impression remains that the UK economy lost momentum in the first quarter as increasingly squeezed consumers limited their spending."