A gauge of services activity dropped to 51.3 from 53.1 in July, Markit Economics and the Chartered Institute of Purchasing and Supply said in a statement today in London. That’s the lowest since April 2009, when the index was last below the 50 mark that signals expansion. Economists forecast a reading of 52.9, the median of 23 estimates in a Bloomberg News survey showed. The pound dropped as much as 0.4 percent.

While Britain’s economy expanded at the fastest pace since 2001 in the second quarter, recent reports suggest growth may be moderating. Manufacturing expansion slowed to the weakest in nine months in August and house prices fell the most in six months, suggesting the Bank of England may have to increase stimulus for the economy.

“We are staring down the barrel of negative quarter-on- quarter gross domestic product in the not-too-distant future,” said Alan Clarke, an economist at BNP Paribas SA in London. “They’ll have to step in and do more quantitative easing,” if the economy weakens and inflation slows at the start of next year.

The Bank of England held its bond-purchase plan at 200 billion pounds ($308 billion) and kept the main interest rate at a record low of 0.5 percent on Aug. 5. Policy makers hold their next meeting on Sept. 9.

‘Fragile’ Economy

The pound declined to $1.5393 after the data were published from $1.5449. The currency was at $1.5413 as of 10:13 a.m., headed for a fourth weekly loss against the dollar.

Deputy Governor Charles Bean said on Aug. 28 that Britain’s economy “remains fragile” and “further policy action may yet be necessary to keep the recovery on track.” The recovery may be curbed by the government’s planned spending cuts to reduce the budget deficit.

Hays Plc, the U.K.’s biggest recruitment firm, said yesterday that full-year profit dropped 91 percent as permanent hiring slumped and the company took one-time charges, including a reserve to cover a U.K. Office of Fair Trading fine.

“Stuttering growth is causing considerable disquiet in the services sector and doesn’t bode well for employment levels,” David Noble, chief executive at CIPS, said in the statement. The government’s austerity measures “appear to be weighing down on confidence.”

A separate report today from the Office for National Statistics showed new orders in the construction industry fell to 11.6 billion pounds in the second quarter, the smallest amount since the first three months of 2009.