Services boom as confidence grows

BRITAIN'S massive service sector expanded in September at the fastest pace for three and a half years, a new survey showed today.

The latest CIPS/Reuters purchasing managers' report on the sector, which accounts for about two-thirds of the economy, showed better trading conditions and a pick-up in confidence triggering an influx of new business.

Firms hired more staff for the second month in a row. The survey's headline business activity index registered 58.7 against 57 the previous month, indicating a sixth consecutive month of growth and the fastest expansion since April 2000. A reading above 50 signals growth.

'Respondents commented that resurgent markets and improved business confidence had led to an increased willingness among clients to commit to new contracts in September,' the report says.

Firms expect the good times to continue amid hopes of a strong upturn in the economy.

Economists said, however, the strong growth would not force the Bank of England into raising interest rates next week.

Alan Castle at Lehman Brothers said: 'It is a surprisingly strong number and adds to the picture of an accelerating economy. I don't believe this survey alone will affect the Bank's decision.'