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UK service sector hiring at fastest in six years - survey

LONDON (Reuters) - British service sector firms are hiring new staff at the fastest rate in six years and are planning to ramp up investment as the country's economic recovery gathers momentum, a survey showed on Tuesday.

In the three months to November, a balance of 41 percent of consumer services firms and 28 percent of business and professional services companies said their staff numbers increased, the survey by British business lobby CBI showed.

The Bank of England is closely monitoring the health of the labour market and has said it will consider raising its record-low interest rates once unemployment falls to 7 percent.

The BoE is also keeping a close eye on investment by businesses which it says is needed to bolster the recovery.

The CBI survey showed service sector firms planned to boost investment in the coming year. Business and professional services firms' expectations of business expansion were at the highest level since May 2004.

The service sector is the driving force of Britain's economy, accounting for around 75 percent of economic output.

Business volumes in the consumer services subsector rose at the quickest pace since May 2007, the survey found, with firms including hotels and travel agencies saying trade far exceeded expectations.

Higher consumer spending has been credited with kick-starting the economic recovery earlier this year.

"Business activity is up, more people are being employed, and optimism is rising fast," said Stephen Gifford, director of economics at CBI.

"Both consumer and business-facing service firms finally seem to be feeling the benefit of growing confidence and spending within the UK and globally," he said.

The CBI, which represents some 240,000 businesses that employ around a third of the UK workforce, spoke to 154 service sector firms between October 25 and November 13 for its survey.

(Reporting By Alexander Winning; editing by Ron Askew)