UK services recovery loses momentum

Weak money supply figures and a surprise dip in a similar survey of the manufacturing sector earlier this week have raised concerns over the sustainability of the recovery.

Wednesday's survey -- showing British services activity grew at a steady, but not spectacular rate last month -- calmed some nerves, particularly as forward-looking components such as new business and expectations continued to rise.

"It's a bit worse than expected but after the big drop in the manufacturing PMI index earlier this week I think it comes as something of a relief," said David Page, an economist at Investec.

"The survey suggests the service sector is still expanding at healthy rate," he added.

The Chartered Institute of Purchasing and Supply/Markit activity index came in at 56.6, the seventh consecutive month above the 50 level that indicates expansion but below October's two-year high of 56.9 and the consensus forecast of 57.0.

Britain must hold an election by June of next year, and a strong recovery would provide a boost to Prime Minister Gordon Brown's Labour Party, which trails the opposition Conservatives in the polls.

NEW BUSINESS UP FOR 4TH MONTH

New business rose for a fourth month in a row and at the fastest pace since September 2007.

"Although growth weakened marginally during November, the recovery of the UK service sector remained intact," said Paul Smith, a senior economist at Markit.