NEW business ventures and increased confidence in the economy helped the service sector to expand last month at its fastest rate for four years.

The Chartered Institute of Purchasing and Supply's (CIPS) purchasing managers' index said activity among service firms was its strongest since November 1999.

Optimism that the economy was growing was cited by service companies as the reason for the rise in business, with clients increasingly willing to be more flexible with their investment plans.

Business start-ups also accounted for a turnaround in the performance of the sector, CIPS said.

Roy Ayliffe, director of professional practice at CIPS, said the service sector was expanding "incredibly well", with a revival in IT businesses particularly notable as they had been lagging behind.

The purchasing managers' index registered 59.1 last month, with a figure above 50 indicating growth and a number below, contraction.

But the figures suggest firms are struggling to deal with the surge in trade as outstanding work levels rose for the third successive month.

Recruitment was stepped up, growing at a slightly faster rate than the previous month.