Markit's and the Chartered Institute of Purchasing & Supply's services purchasing managers' index (PMI) for the U.K. fell to 57.4 in July from 58.5 in June, missing expectations for a decline to 58.0.

A reading above 50 indicates expansion in the sector.

The decline was partly driven by a slower growth in employment.

"A deterioration in service sector growth is the latest in a stream of signals that the economy has slowed as we move into the second half of the year. The fall in the services PMI follows signs of ongoing weakness in manufacturing and a renewed slowing in the construction sector," the Chief Economist at Markit Chris Williamson said.