Activity in the country's services sector expanded rapidly again in October, suggesting that the economy is still posting solid growth. 

The economy is set to grow by 4.6% this year, a rate the European Commission said yesterday would make it the fastest-growing economy in the European Union. 

The Investec Purchasing Managers' Index of activity in the services sector, which covers businesses from banks to hotels, fell to 61.5 from 62.5 in September, but remained just short of June's seven-year high. 

The index has been above 60 for the past eight months and has not fallen below the 50-point line denoting growth since July 2012, when Ireland was half way through a three-year EU/IMF bailout programme. 

"Approximately five times more panellists recorded a rise in incoming new business during October than reported a decline. Respondents cited improving demand from domestic and overseas customers, with higher demand reported in the UK in particular," Investec Ireland's chief economist Philip O'Sullivan said. 

"Following on from Monday's solid manufacturing PMI release, today's report serves as a further illustration of the recovery underway across the bulk of Ireland's private sector at this time," the economist said. 

The sub-index measuring new export business fell to 60.6 from 64.2. 

Mr O'Sullivan said that while the data showed resilience in exports to non-euro zone markets, companies here are not going to be immune to any slowdown across the 18-member euro zone. 

The data also follows figures yesterday that showed Irish consumer sentiment fell to its lowest level since June last month, putting the mood among consumers at odds with the recovery outstripping the rest of Europe.