adminA gauge of activity rose to 54,9 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 report adds to signs the recovery may be gaining traction, after Markit’s reports this week on manufacturing and construction both showed growth.
Bank of England officials started their two-day policy meeting yesterday, and economists predict that they will probably avoid adding stimulus.
“The UK economy has moved up a gear with all cylinders now firing,” said Chris Williamson, chief economist at Markit in London.
“The increasingly buoyant picture and improved outlook painted by the PMIs effectively kills off any chance of the Bank of England’s Monetary Policy Committee voting for more stimulus such as asset purchases for the foreseeable future.”
Markit’s PMI gauge for services in the euro zone rose to 47,2 from 47 in April, less than an earlier estimate for an increase to 47,5.
In Germany, the euro area’s largest economy, the services index rose to 49,7 in May from 49,6 in April, below an initial estimate of 49,8.
The UK economy expanded 0,3 percent in the first quarter, avoiding an unprecedented triple-dip recession after gross domestic product contracted in the final three months of 2012.
Markit’s Williamson said that today’s data suggest further acceleration in growth during the second quarter.
Bank of England governor Mervyn King, who will preside over his last policy decision before retiring at the end of the month, said in an interview broadcast on June 2 that “the economy is growing”, though “not as fast as we would like it to grow, but no one can foretell the future”.
London-based Lloyds Banking Group Plc said on May 16 it will return to profitability in 2013, allowing the government to start selling its stake in the lender.
Lloyds, which ceded a 39 percent stake to the UK state after its US$31 billion bailout in 2008, posted an almost threefold increase in first-quarter profit as impairments for souring loans dropped.
The BOE will probably hold its bond-purchase plan at 375 billion pounds according to the median of 33 estimates in a Bloomberg News survey.
Officials will also hold the key rate at a record low of 0,5 percent, according to all 53 economists in a separate poll.
The bank will announce the decisions at noon in London tomorrow. — Bloomberg.
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