Businesses in the UK’s service sector are in bullish mood following the third consecutive quarter of improved activity in the market, according to business group the CBI.

The CBI said the consumer sector, including leisure industry businesses such as hotels, bars and restaurants, saw the fastest improvement in optimism since 1998.

It said the same of businesses in the professional services sector, including accountants, lawyers and marketing firms.

Business volumes were also up at their fastest rate since 2005, while profitability in the sector improved for the first time since 2007.

Anna Leach, CBI head of economic analysis, said: “2014 has started well for our service sector firms. Business activity is up, optimism is high and profits are improving too.

“It's encouraging that strong growth is being reported across the whole sector. Headcount is predicted to rise next quarter and expectations for an expansion of business over the year ahead are the strongest for a decade.”

The CBI survey involved 139 large businesses from across the service sector.