Bank of England policymakers have been surprised at how rapidly growth has picked up and unemployment has fallen since the spring, raising the prospect of an earlier-than-expected rise in interest rates.
The Bank's nine-member monetary policy committee voted unanimously to leave policy unchanged earlier this month; but minutes of their meeting showed that a strong increase in employment, and upbeat readings from business surveys, had prompted them to upgrade their expectations for growth.
Discussing the upbeat jobs data released this month, the minutes said: "It now therefore seemed probable that unemployment would be lower, and output growth faster, in the second half of 2013 than expected at the time of the August Inflation Report."
They described the latest news as pointing to a "robust recovery in activity" in the UK – though they also warn about the lack of the kind of rebalancing in the economy, towards trade and away from consumer spending, that the coalition was hoping for. "There is a risk that the recovery in the United Kingdom might be less well balanced between exports and domestic consumption than was ultimately needed."
One of the Bank's first decisions after its governor, Mark Carney, joined in July was to issue "forward guidance", promising to keep interest rates unchanged until the unemployment rate falls to 7%, barring a surge in inflation.
When the policy was unveiled in August, Carney said he expected unemployment to remain above 7% at least until 2016; but a slew of data, including a fall in the unemployment rate to 7.7% in the three months to July, had raised doubts in markets about whether the Bank would wait so long before deciding to act. Wednesday's minutes suggest the MPC may be coming round to the idea that the 7% threshold could be reached sooner, though the committee stressed that "it was too early to draw a strong inference about future prospects from the latest data".
Simon Wells, UK economist at HSBC, said: "We expect the MPC to bring forward the timing of unemployment hitting the 7% threshold by around two quarters when it revises its forecasts in November."
Discussions among MPC members also highlighted the growing strength of Britain's housing market, which they expect to boost the economy. "Overall, indicators pointed to continued house price rises. This would increase the collateral available to both households and small businesses, which could provide some further support to activity," the minutes say.
In the latest indication of a revival in the property market, the British Bankers Association announced on Wednesday that the number of mortgages approved by UK banks to fund house purchases reached 42,990 in September, its highest level in almost four years and well above the previous six-month average of 42,990.
The BBA data, which covers the run-up to the launch of Help to Buy mortgage guarantee scheme, shows that activity in the housing market continued to gain momentum over the summer, with house purchase loans showing the biggest increase month-on-month.
The BBA said its members approved new loans worth a total of £10.5bn in September, up from £9.9bn in August and above the six-month average of £9bn. Of this, £6.7bn was for house purchases and £3.5bn for remortgages. The remainder was other secured borrowing.
The BBA statistics director, David Dooks, said: "September's figures build on the growing picture of improved consumer confidence, with stronger gross mortgage lending, rising house purchase approvals and increased consumer credit."
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