The UK economy is continuing to recover, despite service sector growth slipping to a seven-month low, a report has said.

A survey from the Markit/CIPS purchasing managers index (PMI) revealed a reading of 58.3 for the industry, which remains ahead of the 50 mark separating growth from contraction.

The survey said business optimism stood at its highest in four years, despite the impact of record January rainfall.

It said this confidence led companies to maintain recruitment drives, with overall employment levels rising for the thirteenth month in a row.

But the report means overall growth in the sector, which represents three-quarters of the economy and has led the UK out of recession, has fallen for three months in a row. It stood at 58.8 in December.

Chris Williamson, Markit chief economist, urged caution in the findings, which come after very strong growth in previous months.

He said: "The service sector saw another month of strong growth in January, suggesting the UK economy continues to recover at a rapid pace.

"Although the pace of expansion slowed, we must remember growth was exceptionally strong in previous months, and also that parts of the country saw record rainfall in January.

"With business optimism about the future reaching the highest for almost four years, we should see growth revive again in February, hopefully as the weather improves and households and businesses dry out from Januarys rainfall."

He added readings from the manufacturing and construction sectors pointed to another strong quarter for GDP.

The UK expanded by 0.7 per cent in the final quarter of the year.