The UK’s dominant service sector reported growth slowing at its fastest rate for 19 months in December with economic activity and new business deals easing during the festive season.

But respondents to the Markit/CIPS UK Service purchasing managers index (PMI) said employment was still on the increase and projections hinted at a brighter 2015 for the industry.

The services industry incorporates businesses as diverse as shops, pubs, lawyers and financial services businesses, making it critical to the UK economy.

The PMI registered an index score of 55.8 last month, a sharp decline from 58.6 the previous month. On the scale a reading above 50 denotes growth; the higher the figure the faster the sector is expanding.

Growth has now been recorded continuously every month for two years, with the latest activity driven by new business – albeit at a slower rate than November – which remains well above trend levels.

Chris Williamson, chief economist at Markit, which compiles the survey, said: “Weaker rates of expansion were seen in services, manufacturing and construction in December, taking the overall pace of economic growth to the weakest for just over a year-and-a-half.

“The surveys suggest the economy grew by 0.5% in the fourth quarter, and the loss of momentum towards the year-end will no doubt fuel worries that the upturn is too fragile to withstand higher interest rates.

“On the other hand, it’s too early to get worried about a sharp slowdown; after all, the latest PMI reading is still strong, merely down from unusually high levels earlier in the year and in line with the average seen in the years leading up to the financial crisis.

He added: “Importantly, the pace of growth remains robust enough to sustain an impressive rate of job creation, with the survey also finding welcome evidence of increased wage growth.”