Nov. 4 (Bloomberg) -- A U.K. index of service industries from insurance to information technology rose in October to the highest level since the credit squeeze began in August 2007.

The gauge, based on a survey of about 700 service companies, rose to 56.9, Markit and the Chartered Institute of Purchasing and Supply said in an e-mailed statement in London today. Economists predicted 55.5, the median of 31 forecasts in a Bloomberg news survey showed.

The report adds to evidence that Britain’s longest recession since World War II may be coming to an end after Nationwide Building Society said today that consumer confidence held at the highest level in 1 1/2 years. Bank of England policy makers will probably seek to ensure the recovery by increasing their bond purchase plan tomorrow.

“The economy should now have pulled out recession,” Vicky Redwood, an economist at Capital Economics Ltd. in London and a former Bank of England official, said in a note. “But a quick return to rapid rates of growth still looks unlikely and we still think that the Monetary Policy Committee will err on the side of caution.”

Consumer confidence was at 72 in October, the same as the previous month, Nationwide Building Society said today. House prices rose 1.2 percent last month, though they have still dropped 17 percent since the 2007 peak, Lloyds Banking Group Plc’s Halifax division said yesterday.

Economic Recovery

Today’s CIPS report shows the sixth month of expansion. Readings above 50 on the main index show growth.

“The service sector is pulling the U.K. economy out of recession as its own recovery accelerates,” David Noble, chief executive officer at CIPS, said in a statement. “Given that the PMI Services survey accounts for almost 40 percent of the U.K. economy, this bodes well for wider market pickup.”

Logica Plc, the Anglo-Dutch computer-services provider, said today that third-quarter sales rose 2 percent as outsourcing orders increased. Aviva Plc, the U.K.’s second- biggest insurer, said today profitability improved in its biggest life insurance and pensions market in the third quarter.

The Bank of England will increase its bond-purchase plan to 225 billion pounds ($367 billion) tomorrow, according to the median forecast of 48 economists in a Bloomberg News survey.

To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net

Last Updated: November 4, 2009 04:46 EST