THE GROWTH of Britain's buoyant services sector has quickened to its fastest pace for more than a year.

The Chartered Institute of Purchasing and Supply (CIPS) said the recent upturn in confidence among manufacturers had helped boost demand.

Research from CIPS found the key activity index moved further from the no change mark of 50, registering 54.5 in April, up from the 53.8 seen in March.

The sector has now expanded for a fourth month in a row after overcoming the impact of the September 11 terrorist attacks on business.

CIPS director Roy Ayliffe said: "Recent growth in manufacturing has helped to bolster the services sector."

Orders deferred because of the economic situation are also being recommissioned by both domestic and international clients, CIPS added.

That is reflected in the incoming new business index, up to 56.6 from 54.5, as a quarter of survey respondents report a rise in order numbers.

Despite the expansion, firms are still reluctant to recruit staff and preferred to satisfy rising levels of new work through productivity gains.

Although most firms left staffing levels unchanged over the month, around 15 per cent of companies allowed employment to fall by not replacing staff.

CIPS said its employment index recorded 48.9 in April compared with 48.1 in March.

The decline partly reflects a second successive increase in the level of overheads faced by companies.

Higher fuel prices were partly to blame as average input prices index measured 53.9 in April compared with 53.2 in March.

Mr Ayliffe added: "High oil prices squeezed margins throughout April, making professional purchasing techniques crucial to maintain profits.

"The decrease in employment has gone some way to help maintain margins and profitability."