The quarterly survey by the Confederation of British Industry and Deloitte & Touche shows that a balance of 33 per cent of business and professional services companies reported an increase in business volumes - up from the September balance of 22 per cent.
Consumer firms enjoyed less rapid growth, but a balance of 24 per cent said volumes were up - compared with 10 per centin the last survey.
Looking ahead, consumer firms expect an acceleration in the rate of growth over the next three months, while those in business andprofessional services expect a slowdown.
Sudhir Junankar, CBI Associate Director of Economic Analysis, said: 'Firms in consumer, business and professional services are appearing more confident as they see business volumes growing strongly. And the conditions for a non-inflationary recovery now seem to be falling into place, as firms continueto report hardly any upward pressure on selling prices while business is expanding robustly. This evidence of a developing 'virtuous spiral' in the service sector suggests that the Bank of England was right to keep interest rates on hold last week.'
Roger Bootle, Economic Adviser to Deloitte & Touche, added: 'This survey supports those who argue that expanding business need not necessarily imply higher inflation - and this message comes from the service sector where inflationary pressures are supposedly strongest. The picture painted by this survey contrasts with the one shown in the official RPI.'
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