The rate of expansion of business activity in the services sector eased for the third month in a row in May, slowed down by the election and uncertainties in the construction sector, new figures from NCB Stockbrokers show.
The NCB Purchasing Managers' Services Index, designed to monitor business conditions in the sector, came in at 54.9 in May, compared to 58.1 the previous month.
Any reading above 50 signals expansion.
NCB chief economist Eunan King said the rate of growth in the services sector eased in May but remained at a strong level, with employment accelerating.
He said the election and uncertainties in the construction sector were mentioned as factors adversely influencing activity, and will have masked the true reading of the health of the sector.
'The May report is thus probably not a good guide to underlying activity and we would expect the removal of the election and stamp duty issues to support activity in the next few months', he said.
Companies attributed the growth in business activity to an increase in new orders and launch of new services.
The May data signalled a marked increase in staffing levels and employment has now risen for 45 months in a row. The employment sub-index rose to 55.5 in May from 54.6 in April.
The degree of optimism about future prospects a year down the line was high in May with panellists citing expansion plans, marketing campaigns and higher new business volume.
Input cost inflation was sharp in May with firms citing staff salaries, fuel prices and advertising costs. Though sharp, the pace at which input prices increased was weaker than in April, and the average for the past year.
The index for input costs was 62.4, down slightly form 62.8.
Meanwhile, output prices continued to rise in May - but the rate of inflation was modest and the weakest since August 2005.
Panellists that lowered prices cited more competition, while those that raised prices did so to balance out higher costs.
