UK service sector
UK service sector firms account for three quarters of GDP (Reuters)

Growth in Britain's service sector soared to its highest level in over two years during June, in another signal that the economy is slowly starting to recover.

The Markit/CIPS Purchasing Managers Index (PMI) for the UK service sector hit 56.9 in June, up from the previous month's 54.9. Any reading over the neutral 50 mark signifies growth in the sector.

Services firms represent three quarters of UK GDP and are the driving force of the economy. Not only did growth accelerate in June, but there were the highest levels of new business and sharpest rise in employment in six years.

"Surging growth in the service sector accompanied a resurgent manufacturing sector and modest growth in construction in June for an increasingly broad-based economic upturn," said Chris Williamson, chief economist at survey compilers Markit.

"Growth in services and manufacturing is now the strongest for just over two years, while the construction sector is enjoying the fastest pace of expansion for over a year.

"The buoyant picture for June means the economy is on course to expand by at least 0.5% in the second quarter, with more growth to come. New orders and job creation across all sectors are now rising at the fastest rates for almost six years, led by the vast services economy, boding well for robust growth momentum to be sustained as we move into the second half of the year."

Analysts say that because of the uptick in PMI data, the Bank of England is looking less likely to extend its £375bn quantitative easing programme, under the watch of new governor Mark Carney.

"These figures, taken in conjunction with manufacturing and construction, mark a good first week for the new Bank of England governor and will ease pressure on the MPC to embark on another round of QE," said David Noble, chief executive at the Chartered Institute of Purchasing & Supply (CIPS).

"As ever, a handful of issues remain. The macroeconomic environment remains uncertain and competition remains fierce. At the same time, whilst output prices rose, firms are still struggling to pass on the full extent of input price rises to clients.

"Overall however, worse problems have beset the sector in recent years so confidence is rightly high. Barring any major changes to the global economy, we can be optimistic about sustaining this growth as we go into the second half of the year."