“U.K. services growth accelerated more than economists forecast last month as signs mount that the recovery may strengthen, adding to the case for Bank of England policy makers to refrain from further stimulus.
A gauge of activity rose to 54.9, the highest in 14 months, from 52.9 in April, Markit Economics and the Chartered Institute of Purchasing and Supply said today in London. Economists had forecast 53.1, according to the median of 33 estimates in a Bloomberg News survey. Readings above 50 indicate expansion. The pound advanced.
Britain’s economy may be gaining traction after Markit’s reports this week on manufacturing and construction both showed growth. Bank of England officials start their two-day policy meeting today, and economists predict that they will probably keep their quantitative-easing target on hold. The meeting is the last for Governor Mervyn King before he retires and is succeeded by Mark Carney of the Bank of Canada.
The industry surveys “bode well for economic activity in the months ahead,” said James Knightley, an economist at ING Bank in London. “As such, there is little prospect of any BOE action tomorrow and it diminishes the likelihood of any shift in policy under Mark Carney in the next few months.”
The pound extended its advance against the dollar after the index. It was trading at $1.5351 as of 11.23 a.m. London time, up 0.3 percent from yesterday. Sterling strengthened to a two-week high against the euro.
