Confidence among service sector businesses has continued to recover, according to the CIPS/Markit Business Activity Index.

Confidence rose to its highest level since May 2008, with nearly 46% of the survey panel predicting a rise in activity in a year’s time.

The headline seasonally adjusted CIPS/Markit Business Activity Index recorded 48.7 in April, but below the 50.0 no-change mark.

April marked the 12th successive month in which service sector jobs have been cut in line with existing workloads.

Roy Ayliffe, director of professional practice at the Chartered Institute of Purchasing & Supply (CIPS), says: “The health of the UK services economy showed some signs of recuperation in April as the rate of retrenchment eased to its weakest in eight months.

“Though sentiment consequently nudged up, purchasing managers voiced nervousness about immediate recovery, especially as the sector has now contracted for a whole year – the longest in the survey’s 12-and-a-half year history.

“Employment continues to bear the brunt of the battle as jobs were slashed at an exceptional rate with around 22% of service providers streamlining staff.”

Arek Ohanissian, economist at the centre for economics and business research, says: “The indications are that – though contraction continues – the pace of contraction is slowing. This will, in turn, feed into output activity and we expect that the output contraction in the second quarter will be smaller than that for the previous two quarters.”