The financial services sector is bouncing back with business volumes now at pre-September levels.

A survey by the CBI and accountants PriceWaterhouseCoopers, showed an unexpected pick-up in business volumes over the last quarter.

They were growing at the fastest rate for two and a half years.

Building societies, banks, general insurance firms and finance houses reported the strongest increases in volumes.

Of 122 companies surveyed, 56 per cent reported an increase in volumes over the past three months against 13 per cent recording a fall, giving a positive balance of 43 per cent.

The CBI said this compared with 28 per cent expecting an increase in the last survey.

It represented a return to the rates of expansion seen in the financial services sector between the mid-Nineties and March last year, it said.

Volumes were expected to continue to increase in the next three months, although at a more moderate rate.

The CBI said although current levels of business were still below normal, they were back to pre-September levels.

Of those surveyed, 22 per cent recorded a rise in their level of business while 28 per cent showed a fall, a negative balance of six per cent.

Chief economic adviser Ian McCafferty said: "This survey backs up the view that a global economic recovery is under way but the pace of growth over the second half of the year remains uncertain.

"Improvements in pricing power and lower average costs meant profits rose at their fastest rate since September 2000, ending four quarters of decline.

"We are now seeing the first signs of a turn in the investment cycle. Financial services firms anticipate a modest, rather than rapid, recovery."

John Hitchins, at PriceWaterhouseCoopers, said: "Despite strong recovery in profitability and an increase in information technology investment plans in recent months, businesses remain cautious about the outlook."