Reports reveal services leading the UK recovery - London Report

THE UK service sector is once again expected to be the star turn as purchasing managers (PMI) reports this week show continued economic growth.

Figures due out on Wednesday are expected to show the sector held up well in May, remaining stable at 59.5 (with 50 and above denoting growth) after rising to this level from 58.9 in March.

Howard Archer, of IHS Global Insight, said: “Not only was the April activity index strong but also the more forward-looking elements of the purchasing managers’ survey showed the services sector well placed for healthy growth in the near-term at least.”

He noted the Bank of England’s regional agents also reported that business service turnover growth “had remained robust and broadly based.”

PMI figures for construction, which are out tomorrow, are expected to show activity has increased after pre-election uncertainty in April.

Specifically, economists forecast a figure of 55, after falling to 54.1 iin April from 57.8 in March.

Manufacturing figures, due today, are expected to show a score of 52.5 for May, up from the relatively weak score of 51.9 in April – which showed only slight growth in the sector.

In other economic news this week, the Nationwide House Price Index will be released on Wednesday, and Bank of England mortgage approval and household borrowing figures for April are due tomorrow.

Vicky Redwood, of Capital Economics, said: “Tuesday’s household borrowing figures should also bring more convincing signs that a recovery in housing market activity is underway again.”

The housing market is believed to be picking up again, after a slump at the end of last year.

House prices are forecast to have risen 0.4 per cent month-on-month in May, while mortgage approvals are likely to have risen to 63,500 in April.

The corporate calendar kicks off today with news from Camco Clean Energy and Circle Oil.

Final results are due tomorrow from Acal, AO World, BP Marsh, LondonMetric Property, Northacre and Synergy Health, plus updates from Amec Foster Wheeler, Dixons Carphone, Harvey Nash, RWS Holdings and Wolseley.

On Wednesday, Workspace is due to give final figures, while Alternative Investments, Easyhotel and WH Smith will update the market.

Thursday’s figures are due from Johnson Matthey, Pets At Home, VP Group and Wincanton, and Bellway, Halfords and KCOM are due to give figures on Friday.