Source: Sharecast
The final reading of the UK services purchasing managers' index was adjusted to 48.8, up slightly from the preliminary estimate of 48.7 but still down on May's print of 49.3.
This was the second straight month of declining activity – shown by any figure below the neutral 50-point mark – and the lowest reading since January 2023.
S&P Global said respondents to the survey cited "lacklustre domestic economic conditions" as geopolitical uncertainties in the Middle East prompted clients to scale back their risk appetite.
Meanwhile, consumer-facing firms felt the impact of lower footfall due to the heatwave in late-June, offset slightly by a recent boost in demand linked to the FIFA World Cup.
Overall, total new work for services firms fell for the fourth consecutive month, declining at its sharpest rate since November 2022, with export orders slipping again amid "subdued demand" from European clients.
On a positive note, input prices rose at their slowest pace since March on the back of lower fuel prices.
"June data confirmed a clear loss of momentum for the UK economy during the second quarter of 2026, following a positive start to the year," said Tim Moore, economics director at S&P Global Market Intelligence.
"Service sector business optimism improved since May, but remained much softer than at the start of 2026. The marginal uplift in confidence was supported by hopes of a durable US-Iran ceasefire agreement and positivity towards business development plans. However, many firms noted worries about broader UK economic prospects."