Business activity in the services sector had a strong start to the year as cost inflation, though still high, eased to a ten-month low, new figures from NCB Stockbrokers show.
The NCB Purchasing Managers' Services Index, designed to monitor business conditions in the sector, moved up sharply to 61.4 in January, compared with 59.2 in December. Any reading above 50 signals expansion.
NCB chief economist Dermot O'Brien said employment growth in the sector continued to show strong growth, and that the signals suggested that expectations of another year of strong growth in the economy were well founded.
Companies attributed the growth in business activity to an increase in new orders and the recent growth in employment - though this was slightly weaker than December.
The degree of optimism about future prospects improved from December, with 53% of firms expecting activity would be higher in a year's time.
Of the firms questioned, 32% said they experienced a rise in input prices, with a majority commenting on higher staff salaries and electricity prices. However, the rate of cost inflation eased for the second month in a row, and was the weakest since March 2006.
