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Services sector growth powered ahead in May


Handsome barman professional at posh bar making cocktail drinks

Handsome barman professional at posh bar making cocktail drinks

Handsome barman professional at posh bar making cocktail drinks

The Irish services sector expanded at its fastest rate in three months in May with three times more business reporting growth than decline.

Services have not experienced a contraction in almost three years.

Investec's monthly Services Purchasing Managers' Index increased to 61.4 in May compared to 60.6 in April.

A reading above 50 denotes expansion, while any reading below that level signals contraction.

May's reading means that the period in which the sector has been in growth has now stretched to 34 consecutive months.

The index reached an eight-year high of 62.6 in December last year.

The sector was aided by the weakness of the euro against sterling and the US dollar which allowed for some increases in output prices while maintaining competitiveness, helping profits to rise during the three-month period to May.

"We share the optimism of the respondents to the report and expect to see further strong readings over the coming months at least," Investec Ireland chief economist Philip O'Sullivan said.

In a boost for jobs, Mr O'Sullivan said all four sub-sectors - business services, financial services, telecoms, media and technology, and travel and leisure - recorded growth in headcount, as they have done for 18 successive months.

"According to respondents, improving economic conditions was a key factor behind the latest rise in activity, enabling companies to secure greater levels of new business," Mr O'Sullivan added.

He said that more than three times as many panellists reported growing business activity as a slowdown.

Investec said that key metrics of confidence such as job creation and profitability were on the up, with panellists reporting a general expectation that market conditions are set to improve over the next 12 months.

Irish Independent