There was a sharp increase in activity in the services sector in March, supported by new business growth, according to the latest NCB Purchasing Managers' Index (PMI).
At 61.4 in March, down slightly from 62.7, the index indicated that the rate of activity growth weakened, but remained well above the average over the past two years. Any reading above 50 on the index signals expansion.
'Although the March service sector PMI shows a slight easing in activity growth from that registered in February, growth remains very strong and very much in line with the average pace seen in the past two years,' said Dermot O'Brien, chief economist at NCB Stockbrokers.
Incoming new business levels increased sharply at Irish service firms in the month, supported by marketing activities and higher demand, NCB Stockbrokers said.
Employment at service companies rose for the 43rd month in a row, with these businesses hiring staff in response to higher new order volumes and as part of company expansion plans. However, the rate of job creation, although still robust, was the weakest since December 2005. The employment index was 56.8 in the month, down from 57.3 the previous month.
The impact of a series of price rises hit companies last month, with input costs increasing sharply. The input costs index rose to 65.9 from 65.1 in February.
In order to cover their higher costs, companies charged more in the month with the Charges index rising to 54.9 from 54.5 in February. Output charges have now risen for 21 months in a row.
However, optimism remained strong amongst Irish service providers in December, with around half of the 600 companies surveyed anticipating that business activity would be higher in a year's time. The confidence index was 71.4 in February, which was still highly optimistic, although lower than February's 74.9 figure.
