The UK service sector continued to grow in June but the rate of expansion is slowing and concerns still remain, according to a new survey. The Markit/Cips services purchasing managers’ index (PMI) reached 53.9 in June, up slightly from 53.8 in May - a reading above 50 indicates expansion. Markit described the pace of new business expansion as “solid” but pointed out that it eased for the second month in a row to the slowest since February. The service sector also “continues to offer little in the way of job creation”, with employment levels broadly unchanged in June, in line with the trend in recent months. Meanwhile, cost pressures remain “elevated”, Markit said. Hotels, restaurants and catering businesses indicated the strongest month-on-month increase in costs, chiefly food, utilities and wages. “Service providers responded to a rise in their costs by increasing their average output charges. However, competitive pressures ensured that the rate of inflation was only modest,” Markit said. David Noble, chief executive of the Chartered Institute of Purchasing & Supply, said: “Steady and solid new business growth is helping the UK service sector keep its head above water as activity coasts at a below average pace. “The sector has returned to normality following the recent bank holiday shake up with purchasing managers noting improved market conditions and the materialisation of previously delayed projects. “Unfortunately we are not yet seeing meaningful increases in employment figures, with the respective index scraping in just above the 50.0 no change mark for a second successive month. “Moreover, a downbeat mood is evident amongst some in the sector as confidence regarding future activity softened significantly during June. Businesses are less than sure-footed due to worries around austerity measures and general economic conditions.”

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