Confidence in the services sector improved marginally in June, according to the latest CIPS/Markit survey.

The purchasing managers index posted a reading of 51.6, from 51.7 in May.

New business fell in June, with the largest falls among those companies with the relatively greater exposure to consumer spending (such as hotels, catering & restaurants and personal services).

Employment in the sector slumped for a 14th successive month, with the rate of contraction slightly faster than in May.

Confidence reached a 20-month high at the end of Q2, linked to hopes that recent signs of improvement in the macro-economic landscape will be sustained.

David Noble, chief executive, at the Chartered Institute of Purchasing & Supply (CIPS), says: “The services sector is showing signs of life but it is still too early to tell if this is the start of a full blown recovery.

“Consumer spending remains fragile and firms are being forced to slash prices in order to attract customers, even though their input costs continue to rise. With many consumers’ purses staying firmly shut, those that rely most on consumer spending, such as hotels and restaurants, are really feeling the pressure.

“Purchasing managers reported a lack of new business opportunities in line with difficult market conditions. It is still a very tough out there for most firms so it’s hardly surprising that jobs were slashed at an accelerated pace.”