The recession looked certain to be over today after the dominant services sector grew at its fastest pace for two years.

The Chartered Institute of Purchasing and Supply said its index of activity from banking to catering hit 55.3 last month — its strongest reading since September 2007.

It was the fifth consecutive monthly reading above 50 — the cut off between growth and contraction — and higher than the 54.1 reported in August.

Over the third quarter as a whole the index averaged 54.2 — the best performance since the third quarter of 2007 which included the collapse of Northern Rock.

Economists said the recovery in the services sector over the summer more than outweighed problems in manufacturing and construction and dragged the UK out of recession in the third quarter.

Many analysts now forecast growth of 0.3% in the third quarter after five quarters of decline. The figures are released on 23 October.

The pound, which has been under pressure for weeks, was up 0.03 cents against the US dollar at $1.5949 but down 0.3 euro cents against the European single currency to 1.0911.