The UK's dominant service sector showed solid growth in August as firms won an increasing amount of business.

The Purchasing Managers Index registered 53.7, up from July's figure of 51 - anything over 50 denotes growth.

August's number means the service sector has now registered twenty consecutive months of growth.

The latest statistic was the best reading since March, according to Markit, which compiles the figures.

It was also stronger than the 51.1 reading pencilled in by analysts.

The increase in activity was attributed to a combination of new contract wins, marketing and, in some instances, better weather.

New business volumes also continued to rise as a number of companies were able to convert pipeline business into hard contracts.

The figures were due to be released on Wednesday but were mistakenly published by the Reuters news agency.

The index showed companies benefited from a further rise in incoming new business and continued to make inroads into unfinished work.

Capacity was further increased by a significant proportion of service providers being positive about the outlook for their firms.

However, amid evidence that the operating environment remains challenging, sales and activity continued to grow at below par rates.

Confidence was also again well below its historical trend level.

Another worrying sign was the return to rising fuel costs and an increase in prices paid for energy, food and supplier goods in general.

This led to a marked increase in overall operating costs in August.

With input price inflation accelerating to a four-month high, a slight increase in output charges was recorded - the first inflation recorded since April.

Chris Williamson, Chief Economist at Markit, said the survey data added to hopes that the economy would pull out of recession following the 0.5% contraction seen in the second quarter.

"The wild card remains construction, for which the survey data indicated falling activity in August, which could subdue any recovery in the wider economy," he said.

"The big question is whether the expansion can be sustained.

"It is concerning that the upturn in activity was not matched by a similar rise in hiring, with employment in the service sector instead growing at the slowest pace since February, and business expectations for the year ahead remaining very low by historical standards," he added.

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