The service sector contracted at is slowest rate since September but jobs have been shed at a record pace, according to the Chartered Institute of Purchasing and Supply (CIPS)/Markit survey.

Headline Business Activity Index rose to six-month high to 45.5 in March, up from 43.2 marking a fourth successive monthly improvement from November 2008’s record low, while the survey also indicated record job losses as companies streamlined staff.

Confidence levels among UK service providers were at their highest since August 2008. Companies are forecasting that the recession will see competitive pressures reduced in a year’s time as competitors struggle to stay in business (while also increasing the opportunity for acquisitions).

Roy Ayliffe, CIPS director of professional, says: “Though March saw another slight easing in the rate of decline in the UK services economy and long-term confidence nudged upwards, purchasing managers have now reported persistent contraction of the services economy for almost a year.”