Surprise growth in service sector

The UK service sector revealed stronger than expected growth in January, raising hopes that the economic slowdown may not be as severe as first thought.

According to the Chartered Institute of Purchasing and Supply, the sector's activity index rose to 52.5 in January, a slight increase from 52.4 in December. Anything above 50 is considered to represent a growing sector.

The service sector accounts for around 75% of the UK's economy and the figures suggest the caution that has engulfed the business world may not yet be affecting consumers to the same extent.

The Bank of England is expected to cut interest rates this week in a bid to revive the faltering economy and fragile housing market.