Business Irish

Thursday 2 October 2014

Irish service sector expands steadily

Published 06/08/2014 | 08:59

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The services sector expanded steadily in July, albeit at a slightly slower rate than June's seven-year high, a survey showed on Wednesday, suggesting the country's economic recovery remains on track.

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The Investec Purchasing Managers' Index of activity in the services sector, which covers businesses from banks to hotels, eased to 61.3 from 62.6 in June.

It was the slowest pace of growth in four months, but July's reading marked two full years of expansion in the sector, with the index still far above the 50-point line denoting growth.

Ireland's reading compares favourably with the euro zone average of 54.2 - the second-fastest pace in three years.

Ireland's economy expanded by 2.7 percent in the first quarter after being stuck in neutral for the previous two years. In a milestone last week, the country's two main banks reported a profit for the first time in five years.

With the service sector index above 60 for five months now, services firms were able to raise prices for the fourth month in a row, passing on some of the pressure of input costs, which also rose for the fourth month and at a sharper pace than prices.

The subindex measuring price changes rose to 52.9 from 52.6, the highest reading in over seven years and only the fifth time in six years that prices have grown on a monthly basis.

"Taken together with last week's manufacturing PMI release, today's services PMI data show that the Irish private sector appears to have made a good start to Q3," Investec Ireland chief economist Philip O'Sullivan said.

"With improving trends evident both domestically and across Ireland's key trading partners, we are optimistic of further impressive PMI releases over the coming months at least."

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