The powerhouse services sector grew for the sixth month in a row in June, although business confidence slumped to its lowest for more than half a year amid fears over the faltering economic recovery.

A Markit/CIPS survey, where a reading of above 50 indicates growth, showed that activity rose to 53.9 in June, marginally up on the 53.8 the previous month but still below its long-term average.

New business increased in the month as the sector bounced back from the disruption caused by the recent bank holidays for Easter and the royal wedding, and work commenced on previously delayed projects.

However, the rate at which new business increased fell to its lowest level since February and optimism levels were at their worst since October as companies gave a downbeat assessment of current economic conditions.

Today's result means that the services sector, which accounts for some three-quarters of the economy, grew at 0.5 per cent in the second quarter of 2011, down from 0.8 per cent in the previous three months.

This added to fears that the UK's economic recovery has slowed in recent months. Economists at Markit estimate the economy grew at 0.3 per cent in the second quarter, compared to 0.5 per cent in the first quarter.

Uncertainty around the economy also meant that employment levels were flat as companies lacked the confidence to take on new staff.

CIPS chief executive David Noble said: "Steady and solid new business growth is helping the UK service sector keep its head above water as activity coasts at a below average pace.

"Moreover, a downbeat mood is evident amongst some in the sector as confidence regarding future activity softened significantly during June. Businesses are less than sure-footed due to worries around austerity measures and general economic conditions."