The UK’s service sector grew at its fastest rate for 10 months in June as inflation eased back, according to new figures.

Experts said a “turnaround” in spending by UK businesses and consumers helped to support the industry.

The S&P Global UK services PMI survey scored 52.8 for the month, up from 50.9 in May.

Any reading above 50 means the sector is growing, while a score below means it is contracting.

It was notably stronger than expected for the month, with analysts having predicted a reading of 51.3.

Tim Moore, economics director at S&P Global Market Intelligence, said: “June data highlighted a modest rebound in UK service sector growth, fuelled by a turnaround in domestic business and consumer spending after a soft patch during the spring.

“Business activity expansion was slightly stronger than the earlier ‘flash’ estimate for June and the fastest seen since August 2024.”

Surveyed firms said they saw stronger organic sales growth on the back of “improving business and consumer spending”.

However, some companies also highlighted that “subdued” UK economic conditions and the impact of US tariffs were still keeping a lid on potential growth prospects.

Nevertheless, new orders grew at the fastest rate since November last year, driven by domestic demand.

The fresh report also showed that cost inflation eased back to its lowest level for six months, resulting in weaker inflation in prices for customers.

However, the data also showed a continued drop in employment as firms continued to digest recent labour cost hikes.

Mr Moore added: “Concerns about elevated payroll costs meant that service providers were reluctant to turn on the hiring taps.

“Employment numbers decreased for the ninth month running and at a faster pace than in May, with job shedding again often attributed to redundancies as well as the non-replacement of voluntary leavers.”