LONDON — Britain's services sector has returned to growth after a brief slowdown, offering fresh optimism for the UK economy as businesses reported stronger customer demand and improved trading conditions during July.

The latest S&P Global UK Services Purchasing Managers' Index (PMI) rose to 52.1, up from 48.8 in June, moving back above the 50-point threshold that signals expansion. The reading also exceeded the earlier flash estimate, suggesting stronger-than-expected momentum across Britain's largest economic sector.

Businesses reported an increase in new orders, supported by stronger domestic demand and improved activity in technology, professional and financial services. The survey also found that confidence about the year ahead climbed to its highest level since before the escalation of Middle East tensions earlier this year.

Although employment levels remained under pressure as some firms continued to reduce staffing costs, economists said the overall improvement points to a more resilient economy entering the second half of 2026. The stronger services performance also helped lift the composite PMI, which combines manufacturing and services, back into expansion territory.

The latest figures provide an encouraging signal for policymakers and investors, indicating that Britain's private sector is regaining momentum despite inflation concerns and global economic uncertainty. Analysts will now watch whether stronger business confidence translates into sustained investment and job creation over the coming months.