UK service sector grows in June, economy \\\'firing on all cylinders\\\'

LONDON, July 3 (Reuters): Britain's services industry expanded steadily in June, a business survey showed on Thursday, suggesting the economy grew robustly throughout the first half of 2014 and possibly pointing to an interest rate hike within the year.

The Markit/CIPS services purchasing managers' index (PMI) came in at 57.7 in June, down from 58.6 in May and marking a three-month low but holding far above the 50 line denoting growth. The headline figure was below a consensus forecast of 58.3 in a Reuters survey.

Business expectations in the sector were at a seven-month low, but new business volumes saw their sharpest rise in six months and the industry created jobs at a record pace.

Britain's economy posted its fastest annual growth since 2007 in the first quarter, and Markit's chief economist Chris Williamson said this week's surveys suggested that momentum was holding.

"Alongside an ongoing surge in construction and the largest quarterly rise in manufacturing output for 20 years, the services PMI confirms that the economy is firing on all cylinders," Williamson said.

A composite index combining PMIs for manufacturing, construction and services also eased to a three-month low of 58.4 in June from 59.1 in May.

Williamson said the data pointed to 0.8 per cent growth in the second quarter, keeping up Britain's strong growth momentum at the start of the year. The economy grew 0.8 per cent in the first quarter, taking annual growth to 3.0 per cent. "The persistent strength of the PMI surveys raises the likelihood of policymakers deciding that a pre-emptive rise in interest rates later this year is warranted, especially given the speed at which the labour market is improving," he added.

Britain created a record number of jobs in the three months to April, according to official data. The Markit services survey's employment index meanwhile rose to a record high of 58.8 in June from 56.2 in May.