May data indicated a renewed upturn in UK service sector output, helped by improving confidence among clients and fewer reports of tariff concerns.
However, service providers noted that elevated business uncertainty and pressure on corporate budgets from rising payroll costs continued to dampen demand.
Total new work decreased for the fourth time in the past five months, despite a near-stabilization in export sales.
The headline seasonally adjusted final S&P Global UK Services PMI Business Activity Index registered 50.9 in May, above the earlier 'flash' reading (50.2) and up from April's 27-month low of 49.0.
Output growth was nonetheless only marginal and much weaker than the long-run survey average. Service providers reporting an increase in business activity generally cited the impact of improved business optimism after the US tariff-related slump seen in April.
Resilient consumer confidence, new marketing initiatives and competitive pricing strategies also helped to boost overall output levels, according to survey respondents.
At 50.3 in May, up from 48.5 in April, the seasonally adjusted S&P Global UK PMI Composite Output Index moved back above the neutral 50.0 threshold.
That said, the latest reading was still the second-lowest since October 2023. Higher levels of service sector output contrasted with a solid reduction in manufacturing production.
UK private sector firms indicated that total new business decreased for the sixth consecutive month in May. This contributed to another solid fall in staffing numbers.
Despite weaker order books and cutbacks to staff hiring, latest data indicated a rebound in business optimism to its highest for six months.