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UK services rebound, easing fears of slowdown on eve of election: PMI

[LONDON] Britain's huge service sector unexpectedly picked up speed in April, a survey showed on Wednesday, countering other signs that the economy was slowing just before a national election on Thursday.

The Markit/CIPS services purchasing managers' index (PMI) climbed to an eight-month high of 59.5 in April from 58.9 in March and beating the median forecast for a fall to 58.5 in a Reuters poll.

Chris Williamson, chief economist at Markit, said the survey eased fears that the economy was slumping because of jitters about the outcome of Thursday's closely fought election.

Similar surveys showed Britain's smaller manufacturing and construction sectors slowed in April. And in the first three months of the year, growth in Britain's overall economy slowed to just 0.3 percent.

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Mr Williamson said the April PMIs suggested that the economy was on course to bounce back in the second quarter, which it began at a quarterly growth pace of 0.8 per cent.

Britain's National Institute for Economic and Social Research also said on Wednesday it expected growth would pick up again, although the weak first quarter weakened its forecast for British growth in 2015 as a whole.

The PMI is likely to be highlighted by Prime Minister David Cameron on his last full day of his election campaign, in which he has focused on the recovery in the economy since early 2013.

But Mr Williamson said the numbers also underscored the lack of balance in Britain's economy, which has become increasingly reliant on services rather than manufacturing. "The consumer is having to drive growth as investment spending remains disappointingly weak amid heightened political uncertainty," he said.

Markit said prices charged by service companies fell for the first time in six months and were their lowest in more than three years, reducing the chances of the Bank of England raising interest rates this year.