The IHS Markit/CIPS services Purchasing Managers' Index (PMI) edged up to 51.0 from 50.4 in April, its strongest reading in three months and slightly above economists' average forecast in a Reuters poll.
Equivalent PMI surveys for manufacturing and construction published earlier this week unexpectedly fell deep into contractionary territory, however, and taken together, the three PMIs gave one of their weakest readings since 2012.
"The PMI surveys collectively indicated that the UK economy remained close to stagnation midway through the second quarter," IHS Markit economist Chris Williamson said.
Official data showed Britain's economy grew a robust 0.5% in the first quarter of the year, though much of that was driven by firms stockpiling ahead of a Brexit deadline of March 29, which has since been postponed until Oct. 31.
The Bank of England forecasts Britain's quarterly economic growth rate will fall to 0.2% for the three months to June.
Many services firms said Brexit worries continued to hurt sales in Europe, echoing a concern voiced by manufacturers on Monday.
"Domestic political uncertainty remained a key factor holding back their growth expectations for the year ahead," IHS Markit said, adding that Brexit concerns were weighing on business investment and consumer spending.
Prime Minister Theresa May announced her resignation in May ahead of a heavy defeat for her Conservative Party in European Parliament elections, triggering a leadership contest that could open the way for a successor with a tougher line on Brexit.
Nonetheless, the survey found optimism among services firms rose to its highest since September 2017 and hiring was the strongest since November.
BoE officials have said that in an uncertain business environment, British firms tend to meet expansion needs by hiring staff -- who can be easily sacked in a downturn -- rather than make long-term investments that are costly to reverse. - Reuters
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