THOUSANDS of employees in the south's buoyant financial services sector today received a feel-good boost.

The confidence of their companies has improved more than at any time in the last four years as business grew at its fastest rate since last summer, according to the latest quarterly survey of the sector by the CBI and PricewaterhouseCoopers. A jobs drive is now on the cards following a spate of redundancies, such as the ones suffered at bank giant HSBC in Southampton earlier this summer.

This is the second healthy survey in a row, suggesting that a broad-based recovery has now taken over from the sharp downturn of the winter and spring. Forty-four per cent said they were more optimistic about the business situation in their sector than three months ago while seven per cent were less optimistic.

The balance of plus 37 compares with plus eight in the previous survey and is the best since June 1999. Growth in business volumes was better than expected.

Only modest growth had been expected but the balance of plus 37 per cent indicates the fastest rate of growth since June 2002.

Expectations for the next three months are the strongest since December 1999.

For the first time in two and a half years more respondents said business was above normal than below.

More financial services companies expect to increase employment over the next three months than expect to reduce it. That's the first increase in employment optimism in over a year.

John Hitchins, UK banking leader at PricewaterhouseCoopers, said: "The return of private investors to the market is an important signal of recovery." Ian McCafferty, CBI chief economist, said: "A second successive healthy survey suggests the recovery in financial services is taking hold and the industry is this year much more optimistic."

Business volumes rose sharply in every financial services sector apart from insurance broking. The biggest increases in volumes were recorded by general insurers, securities traders and banks. The fastest rates of job cutting over the last three months have been among life insurers and fund managers, while building societies and finance houses have taken people on.