Activity in the sector - which includes restaurants, hotels, transport and business services and accounts for more than three-quarters of the economy - rose at its fastest pace in eight months, according to the
The headline index rose to 59.1 from 57.7 in July, and any reading above 50 indicates expansion. Economists were expecting a more modest increase to 57.9.
The figure offsets weakening growth indicated in the equivalent survey for manufacturing, suggesting the third quarter got off to a reasonable start in July after growth of 0.8% in both the first and second quarters. Economists said there was no sign of the slower growth predicted by the Bank for the second half of the year.
Economists said that the better than expected PMI increased the prospects that one or more members of the Bank's nine-strong monetary policy committee would vote for a rate rise when it makes its monthly policy decision tomorrow.
It would be the first time that a member has voted for a rise since
But services companies surveyed for the July PMI reported that their operating costs were being driven higher by increases in wages, reinforcing expectations that rates might rise sooner rather than later.
Heightened expectations of a rate rise in
Despite the increase in the headline index, employers across the three sectors combined created jobs at a slower rate in July than they did in June.
In the US a surge in activity across the services sector in July fuelled by spending on new homes put the economy on track for a strong second half of 2014, according to a business survey.
Businesses recorded growth rates only slightly below the previous month's record as the US continued to rebound from the freezing weather in the spring that sent the economy's recovery into reverse.
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