Factory PMI hits 13-month high

By Fiona Shaikh and Sumeet Desai

LONDON (Reuters) - Hopes that economy is emerging from recession got a boost on Wednesday from data which showed less of a decline in services and manufacturing activity, though doubts remain about the durability of any recovery.

Britain's main manufacturing survey, the CIPS/Markit manufacturing purchasing managers' index, rose to 47.0 last month from 45.4 in May -- the highest since May 2008 and just ahead of analysts' forecasts for smaller improvement to 46.5.

Manufacturing output grew for the first time since last March, with an index reading of 52.1 up from 48.1 in May, though the overall index, which includes hiring intentions and other elements, still shows a modest contraction in overall activity.

For the bigger services sector, official data showed output fell at its slowest rate in six months, suggesting the worst may be over after a year of recession.

"At the very least, today's numbers are consistent with the manufacturing sector being much less of a drag on growth in the second quarter," said Colin Ellis, economist at Daiwa Securities.

"If the past improvement in the services PMI is sustained and maps into official data, (that) could mean the economy actually posts modest growth in the second quarter."

The economy contracted at its sharpest pace in more than 50 years in the first three months of this year, but survey data have suggested a pick-up may be in sight.

Policymakers, however, have been reluctant to call the start of an upturn, warning that downturns in other countries and tight credit conditions at home pose big obstacles to growth.