A sharp rise in profits at Google has provided more evidence that the online advertising and technology sectors are bouncing back from the recession.

Last night’s 37% improvement in Google’s first quarter profits to 1.96 billion US dollars (£1.3 billion) comfortably beat Wall Street expectations.

Revenues rose 23% to 6.78 billion US dollars (£4.4 billion) - the biggest rate of growth since the third quarter of 2008 - as more people clicked on internet ads powered by the company’s search engine.

The group added nearly 800 staff in the quarter, taking the total to more than 20,600, while it pledged to invest in products and acquisitions.

The recruitment drive fuelled fears among investors that Google may abandon some of the financial discipline that it exerted during the recession, causing shares to fall almost 5% in after-hours trading in New York.

Chief financial officer Patrick Pichette said: "Hiring more people does not mean we are wasteful. It just means we have a great agenda."

There was also concern on Wall Street that the average first quarter price paid for Google ads fell 4% from the fourth quarter, although it was up 7% on a year earlier.

The better-than-expected performance from Google extends a strong start to the earnings season in the United States.

This has included figures from chipmaker Intel after it revealed that first quarter profits nearly quadrupled on a year ago.

The industry bellwether benefited from higher sales of new chips for computer servers - the kind of purchase that many firms delayed in the recession. It also expects to hire about 1,000 people this year worldwide, having reduced its headcount over the last year from 82,500 to 79,900.