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Britain's services sector grows again

BRITAIN'S services sector, which accounts for around two-thirds of the total economy, is growing again, a closely watched survey found yesterday, reinforcing hopes that the recession may soon be over.

The Chartered Institute for Purchasing and Supply and financial information company Markit said their monthly services sector purchasing managers' index - a broad gauge of business activity - rose to 51.7 in May from April's 48.7. The rise above 50, the first since April 2008, was unexpected.

May's reading, which was the highest since March 2008, suggests the sector is growing again as any reading above 50 indicates expansion.

Purchasing managers seem to be even more optimistic about the future. The business expectations index rose to 69.8 in May, its highest since October 2007, from April's 64.6.

Following better than anticipated surveys into the manufacturing and construction sectors earlier this week, there are now mounting hopes that the British economy could be poised for an economic rebound in the second half of the year.

In the first quarter of 2009, the British economy shrank by 1.9 percent from the previous three month period.

"If the rate of change in activity continues in this way, all three sectors could see a return to growth within the next few months," said Benjamin Williamson, from the Centre for Economic and Business Research.

"This would mean an almost certain return to economic growth by the end of the year."

The composite purchasing managers index, which combines all three sectors, rose to 50.4 in May, the first time it was above the crucial 50 balance since March 2008.

This week's surveys come as the rate-setters at the Bank of England begins monthly deliberations, but it is expected to continue with its policy of expanding the money supply.


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