LONDON (Reuters) — Companies in Britain's dominant service sector slashed jobs at a record rate in the three months to February as sales and profitability dived, a survey showed yesterday.

The Confederation of British Industry said firms selling services to businesses saw the volume and value of their business, profitability and staff numbers fall at the fastest rate since its survey began 10 years ago.

A measure of companies' overall confidence climbed from previous lows but sentiment remained deeply negative.

Profitability at consumer services companies fell at a record pace and jobs were shed at the sharpest rate since the survey began in November 1998. Firms said lack of demand was likely to limit growth over the next 12 months.

Britain's economy is suffering its first recession since 1991 and the survey suggests the downturn has further to run as households and businesses clamp down on spending and investment. Services account for three quarters of UK economic output.

Unemployment has soared to just under two million and some experts predict it will hit three million in 2010.

"The effects of a global recession are being keenly felt by services firms," said CBI chief economic adviser Ian McCafferty. "Consumers are clearly reining back their discretionary spending."

The balance measuring companies' overall confidence rebounded from previous lows in both the business and consumers services sectors but remained indicative of deeply negative sentiment among firms.

The optimism balance for consumer firms rose to -53 from -81 in November.