* Signs that fragile recovery in Q1 may be gathering pace
* Services, factory and construction surveys all above
* Relief for government under pressure over austerity
By Christina Fincher
LONDON, May 3 Britain's economy may be finally
gaining some ground, with stronger-than-expected growth in the
dominant services sector capping a week of relatively upbeat
The services sector - which accounts for around
three-quarters of Britain's economy - grew at its fastest pace
in April since last summer's Olympics, boosted by the strongest
increase in new orders in almost a year.
Along with recent forecast-beating gross domestic product
data and manufacturing and construction surveys, Friday's
services reading will ease pressure on the government to water
down its austerity programme, even after a poor showing in local
elections this week.
It also reinforces expectations the Bank of England will
refrain from further stimulus next week, and possibly longer.
A Reuters poll this week showed almost half of economists
now believe there will be no further government bond-buying this
Sterling rose against the dollar on Friday as the rise in
the service sector survey further diminished expectations that
the Bank of England might pump more money into the economy any
"Today's release marks a hat-trick of upside surprises for
April," said Simon Hayes, UK economist at Barclays. "Recent
activity indicators have had a more encouraging tone and add to
the case for the Monetary Policy Committee holding policy when
it meets next week."
The Conservative-led government coalition austerity
programme has been under fire for stifling growth and the latest
data may relieve political pressures reflected in poor poll
The anti-European Union UK Independence Party made big gains
in local elections on Thursday against the conservatives.
The Markit/CIPS services Purchasing Managers' Index rose to
52.9 in April, its highest reading since August and the fourth
consecutive monthly rise. Economists in a Reuters poll had
expected the index to stay at March's level of 52.4.
The improvement was broad-based, supported by the strongest
rise in new orders since last May.
Markit's combined index of services, manufacturing and
construction in Britain rose more than a full point to 52.1 in
April, also the highest since last August.
The figures will be welcomed by the government which, until
last week's GDP data, feared the country might be slipping into
its third recession in five years. In the event, the data showed
Britain's economy grew 0.3 percent in the first three months of
Markit economist Chris Williamson said April's purchasing
managers' surveys suggested the return to growth seen in the
first quarter may have gained momentum at the start of the
That prospect should help the government avoid criticism
from the International Monetary Fund draws up its annual health
check of Britain's economy later this month.