Services sector expands at slower pace in May
THE services sector expanded at a slower pace in May, although the rate of growth in export orders picked up as the slump in business activity across the euro zone began to ease, a survey showed today.
While services activity for the euro zone as a whole has contracted in all but one month since September 2011, the sector has expanded for 10 successive months in Ireland and will likely help the country's econmmy grow for a third year in a row.
The Investec Purchasing Managers' Index (PMI) of services sector activity slipped to 52.7 from 55.2 in April, but stayed well above the 50 line that separates growth from contraction.
That compared to a 47.7 reading for the Eurozone Composite PMI in May, up from 46.9 a month before. Some Irish respondents saw the slower paced falls elsewhere as a sign that things would improve for Ireland's export-focussed economy.
"The high level of optimism in the sector gives us confidence of further expansion over the coming months," said Investec Ireland chief economist Philip O'Sullivan.
"Some respondents cited expectations of an improvement in the European economy as underpinning their positive outlook. As pressures in the Eurozone have abated in recent times, we would view this optimism as well-founded."
While new orders overall also increased at a slower pace in May, the PMI sub-index measuring new export business at services companies rose to 56.5 in May from 54.6 a month earlier, extending the current run of growth to 22 months.
A survey earlier this week showed that Irish manufacturing fell for the third month in a row in May, albeit at a slower pace, to leave Ireland increasingly reliant on its services industry if it is to eek out economic growth again this year.
Ireland's services sector accounts for 70 percent of GDP, although that includes public services not covered by the Investec survey.