FURTHER evidence of a pick-up in the UK economy emerged last night with figures showing the services sector growing at its strongest pace in three months during November.

Growth in new business was particularly strong and helped combat the impact of higher energy costs, according to the monthly survey by the Chartered Institute of Purchasing and Supply (CIPS).

The CIPS Purchasing Managers Index (PMI) for services showed a reading of 56.7 last month, compared with 56.3 in October - a figure higher than 50 indicating growth. Analysts had predicted a fall to 55.8.

The only concern was the rise in input prices, which reached their highest level in more than four years. Companies reported increased utility costs, rising supplier prices and higher labour costs, as well as soaring fuel bills.

Only two days ago, another CIPS survey showed stronger than expected activity in the manufacturing sector.

Experts said the positive reports suggested it was still too early to be certain that interest rates had peaked.

The CIPS said a key factor underpinning the growth was further gains in new business, which rose at the sharpest rate since June.

The employment index soared to its highest level in more than three years as employers hired more staff to deal with heavier workloads. Hopes for future business levels were also high, with the business expectations index posting a reading of 74.1 - slightly higher than last time.

Economist Vicky Redwood, at Capital Economics, said that, taken together, the reports pointed towards some pick-up in GDP growth in the fourth quarter.