Britain's services firms grew more strongly in December than initially thought and optimism hit a seven-month high, according to a survey that will be welcome news for Prime Minister Rishi Sunak who is expected to hold an election later this year.

The final S&P Global/CIPS UK Services Purchasing Managers' Index (PMI), published on Thursday, rose to 53.4 in December, its highest since June and up from 50.9 in November and a preliminary reading of 52.7.

Expectations for future activity rose to the highest since May.

Sunak has promised to get the economy growing more strongly but official data published last month suggested it could already be in a mild recession. The opposition Labour Party, which is far ahead of Sunak's Conservatives in opinion polls, has accused him of overseeing a slump in the country's growth.

A separate survey published late on Wednesday by the British Chambers of Commerce also showed companies were a bit more optimistic about sales growth this year after a largely flat 2023, although they remained wary about increasing investment.

Tim Moore, economics director at S&P Global Market Intelligence, said the PMI data showed the services sector ended 2023 on a high, helped by hopes of interest rate cuts by the Bank of England (BoE) and a stronger world economy.

"However, many firms continued to cite challenging underlying business conditions due to the stagnating UK economy and strong pressure on margins from rising labour costs," Moore said.

Higher wages - a worry for the BoE - helped speed up the pace of input inflation for a second month in a row despite lower transport and raw material costs. In response, companies increased their prices by the most since July.

The BoE is facing calls from business leaders, worried about the economy, to cut interest rates. Investors are pricing in a first reduction in Bank Rate in May.

The composite PMI, which combines the services survey with a weak reading of the manufacturing sector published on Tuesday, increased to its highest since May at 52.1 in December from 50.7 in November.

Thursday's PMI showed services firms enjoying the strongest growth in new orders in six months although export demand rose only marginally. A fall in staffing numbers represented the third drop in four months. (Reporting by William Schomberg; Editing by Hugh Lawson)