Recruitment in the UKs service sector last month increased at the fasted pace recorded since January 2016, according to the latest IHS Markit/CIPS UK Services PMI survey.
It also shows that there was an upturn in new work experienced by the sector, after a nine-month low in June, despite inflationary pressures resulting in higher operating expenses.
However, optimism regarding the business outlook remains subdued, with a sizable amount of respondents warning that Brexit-related uncertainty continues to weigh on growth prospects for the year ahead.
"Businesses remain in expansion-mode despite heightened uncertainty about the outlook, but the risks to future growth remain firmly biased to the downside," IHS Markit chief business economist, Chris Williamson, said.
"Firms' prospects for the coming year have slipped to a level which has previously been indicative of the economy stalling or even contracting, reflecting heightened uncertainty about the economic outlook and Brexit process."
How expectations in the UK's service sector have changed over the last two decades is shown below:
The service sector moved up from 53.4 in June to 53.8 last month in the IHS Markit/CIPS business activity index, with any score above 50 signifying an improvement, and anything below that a deterioration.
This latest recording marks twelve consecutive months above the no-change value of 50, although business expansion was one of the weakest seen since last autumn.
While it was also found that higher operating expenses resulted in the service sector increasing its average prices at the fastest pace recorded for three months.
The results, along with those from two other PMI surveys for manufacturing and construction, are consistent with economic growth of 0.3%, according to Williamson, putting the country on course for sluggish expansion in the third quarter.
"While the current picture remained one of an economy showing overall resilience in the face of concerns about the outlook, it's likely that growth will at least remain modest and could easily weaken in coming months," he added.
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