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.
The latest Investec Purchasing Managers' Index 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.
While services activity for the euro zone 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 economy grow for a third year in a row.
The services sector is divided into four main areas - business services; technology, media & telecoms; financial services and transport & leisure.
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.
Companies cited higher new orders from the UK and the Middle East as contributing to the rise in new export business.
Service providers took on extra staff again last month, led by the business services sector. Employment in this areas has now risen for nine months in a row, although the rate of job creation was the slowest since last September.
Today's survey also revealed a fall in profits again over the three months to May, but the pace of reduction slowed from the previous survey period and was only modest. It noted that profits have fallen in each survey period since January 2008.
A survey earlier this week showed that activity in the manufacturing sector fell for the third month in a row in May, albeit at a slower pace. This leaves the country increasingly reliant on its services industry if it is to see out economic growth again this year.
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 euro zone have abated in recent times, we would view this optimism as well-founded,'' he added.
