Services sector returns to growth

Ireland’s services sector returned to growth last month after two successive months of decline.

The latest NCB Stockbroker’s Purchasing Managers Index (PMI) indicated activity rose at its fastest pace since February 2011.

The index, which is derived from a questionnaire sent to a panel of 600 companies in the services sector, rose to 53.3 last month from 48.3 in January.

A reading below 50 signifies contraction.

Service providers, ranging from hotels and hairdressers to IT firms and telecoms, have been among the worst hit in the recession.

The NCB’s sub-index measuring new business rose for the first time in three months on what it said were signs that clients were more able to commit to new projects.

The survey suggested business sentiment also improved last month, with the level of optimism now at its highest level for 12 months.

However, staffing levels at Irish firms continued to fall during February, with respondents noting both redundancies and resignations.

Employment has decreased for ten successive months, the survey showed, but February’s fall represented the slowest rate of decline since November.

The sub-index for input costs rose again last month due to higher fuel costs while export orders gained further momentum, growing at their fastest pace in a year.

"This is a welcome development given the weak house price and retail sales data in January," said Brian Devine, economist at NCB Stockbrokers.

"Ultimately, employment growth will be required for there to be a meaningful recovery in the Irish economy and to-date this is still elusive," he added.