The financial services sector saw an unexpected growth in employment last quarter, according to the latest figures from an industry survey.

The latest quarterly CBI/ PricewaterhouseCoopers Financial Services survey showed employment grew by 19 per cent. Some 95 financial firms contributed to the survey in February and March which saw employment grow by 19 per cent, compared to a predicted fall of 18 per cent.

Employment in the previous quarter had seen a fall of 13 per cent and was predicted to decline further. It is now expected to grow by 20 per cent in the next quarter.

Volumes of business also grew for the eighth consecutive quarter and optimism grew for the first time in a year.

Ian McCafferty, CBI chief economic adviser, said: “Financial services sales volume and income continued to rise this quarter, putting the sector’s recovery on a firmer footing.

“Optimism levels and business investment intentions have also improved, in contrast to last quarter as some of the worst risks around the euro area crisis have eased.

“The unexpected rise in employment is a further encouraging sign for the sector. But with the current level of business regarded as below normal, conditions still remain challenging for financial firms.”

For investment management, business volumes and profitability rose strongly although firms cited uncertainty about demand as a constraint on investment.

Pars Purewal, UK investment management leader at PwC, said: “Investment managers have shown much more confidence in their sector compared with recent quarters. Growth in investment management is expected although continued cost reduction programmes across the sector mean further headcount reductions are likely. Investment managers also need to look to the regulatory changes on the horizon and factor these into their plans and business models.”