Ireland bucks European trend as service sector reports growth
IRELAND was one of the few countries in Europe to report an increase in economic activity in the services sector last month as the economy continued to show signs of stabilisation while the rest of Europe slips into recession.
The latest NCB Ireland Services Purchasing Managers' index rose to 53.9 in September from 51.7 in August as confidence, new business and employment levels all gathered pace. Business surveys in other European countries were generally terrible, denting hopes the economy will return to growth before 2013, but the US also saw the sector expand.
The rate of growth here was the fastest since February 2011 as almost half of the companies surveyed said they were optimistic about the short-term.
Respondents expect business expansions and new product launches to support the rise in activity in the next 12 months.
New business in Irish services firms grew at its sharpest rate in more than two years, with survey respondents mentioning new export orders from Japan, Germany, the United States and Britain.
Employment also grew for the first time in six months, with the sub-index growing to 51.5 from 49.1.
"It is encouraging to see panellists report an improvement in new business in both domestic and international markets, and this is helping to feed into an improvement in services employment," said NCB Stockbrokers economist Philip O'Sullivan.
Services industries in the US expanded unexpectedly last month following three straight months of slight contraction. That implies the US economy grew for the 40th consecutive month in September.
The US and Irish figures were a rare piece of good news as data from Asia to Europe showed most economies cooled last month as the debt crisis pulled the Spanish and Italian economies into recession and dampened global growth prospects. In China, the index fell to 53.7 in September from 56.3 in August. That was the lowest since early 2011.
In the euro area, the gauge slipped to 46.1 from 47.2 and a British measure also fell. Readings below 50 indicate contraction.
"The global environment will remain challenging," said Silvio Peruzzo, an economist at Nomura International in London.
"In the euro area, there's a lack of demand because of austerity; some countries have suffered more than others. We expect the economy to shrink again in the third quarter with a significant chance for another contraction in the fourth," he added.