In the three months to March, the UK financial services sector saw activity grow strongly for the third quarter in a row, but numbers employed in the sector continued to drop, while staff turnover increased, according to findings published today.

Firms considered the level of their business is only slightly below normal, the best result since the financial crisis began in September 2007, according to the latest Confederation of British Industry (CBI)/PwC Financial Services Survey. Asked how business volumes had fared in the three months to March 2011, 33% said that volumes rose and 11% said they fell. The resulting balance of +22% exceeded firms' expectations (+15%) and was only slightly below balances of +27% and +28% recorded in the preceding two quarters. Growth in business is anticipated to pick up a little further in the coming three months (+30%).

Numbers employed in the financial sector fell for the second quarter in a row. Staff turnover also rose, but is expected to be only marginally higher next quarter. Staff costs, as a proportion of total costs, are expected to fall further next quarter.

Ian McCafferty, CBI chief economic adviser, said: "A third quarter of strong volume growth shows the financial services recovery is building strength. It is particularly good news that firms consider their level of business to be only slightly below normal, for the first time since the financial crisis began in 2007.

"While business with private individuals has again shown the fastest growth, business with companies also shows some signs of improvement. Firms' profitability has improved due to higher incomes and another big drop in the value of non-performing loans." Despite the cost pressures and narrowing of average spreads, a combination of rising incomes and the fall in the value of bad debts led firms' profitability higher in the past three months, and at the fastest rate since December 1993. A similar improvement is expected in the coming quarter.

This survey was conducted between 24 February and 10 March 2011 and there were 94 respondents. The quarterly survey began in December 1989.