LONDON, July 3 (Reuters) - British services sector activity expanded at the fastest rate in nearly a year in June, and the prices they charged rose at the slowest pace in almost four years, according to a survey on Thursday that is likely to be welcomed by the Bank of England.
The S&P Global UK Services Purchasing Managers Index rose to 52.8 last month from 50.9 in May.
June's PMI was slightly stronger than a preliminary estimate of 51.3 for the month and it marked the fastest pace of growth since August 2024.
Prices charged by services firms increased at the weakest rate since February 2021.
The BoE is watching service sector prices carefully as it gauges inflation pressure in the economy. Investors largely expect the BoE to follow up on its May interest rate cut with another reduction in August, after it paused in June.
"A combination of easing price pressures and lower employment leaves the door open for the Bank of England to resume its run of interest rate cuts at the next policy meeting in August," Tim Moore, economics director at S&P Global Market Intelligence, said.
The PMI survey showed the biggest upturn in new business since November, mainly from domestic clients.
Still, business expectations for the year ahead weakened slightly as many firms were worried about political and economic uncertainty, in part due to the impact of U.S. President Donald Trump's tariffs.
But the survey also showed continued pressure on companies from labour costs, reflecting an increase in employers' social security contributions and a nearly 7% rise in the minimum wage.
Firm cut staff numbers in each of the past nine months, largely by not replacing workers who left.
New export orders fell for the third consecutive month and at the faster rate than in May, mainly due to weaker demand in Europe and the U.S.
The composite PMI, which combines the services data with Tuesday's manufacturing survey, edged up to 52.0 from May's 50.3.
The manufacturing PMI showed factories turned more optimistic last month, with some signs of the sector turning a corner in its long slump.
Reporting by Suban Abdulla, editing by Andy Bruce and Hugh Lawson
Source: Reuters