Activity in services sector grows again

ACTIVITY IN the Irish services sector expanded for the second month in a row in March, although the pace of growth slowed slightly.

The NCB Services Purchasing Managers Index (PMI) shows both new business and new export orders continued to grow, boosting the headline index to 52.1 last month.

That was slightly lower than the 53.3 recorded in February, but remained above the 50 mark that separates expansion from contraction.

New business recorded 52.1 for the month, down from 53.5 a month earlier. New export orders, meanwhile, rose slightly from 55.2 to 55.5 in March.

Confidence was at its highest level in almost two years, recording a reading of 70.4 compared with 66.9 a month previously.

Employment continued to grow, at 51.9 compared with 47.9 in February. NCB chief economist Brian Devine said this was “a positive sign coming on the back of the expansion in employment in Q4 2011”.

Globally, Britain’s dominant services sector saw surprisingly strong business growth in March and struck an optimistic tone about the months ahead, providing a further sign that economic recovery is taking hold.

The Markit/CIPS PMI for the services sector rose to 55.3 in March, up from 53.8 in February.

Across the euro zone things were less cheerful although Markit’s euro zone services PMI edged higher to 49.2 and was a little less gloomy than a preliminary reading had shown.

Growth in Germany’s services sector slowed in March, but Europe’s largest economy looks to have avoided tipping into recession in the first quarter as it weathered the euro zone crisis better than its peers. Markit’s PMI for the German services sector fell to 52.1 in a final reading for March, from 52.8 in February.

However France’s services sector stagnated, with a reading of 50.1 last month on top of a mark of 50 in February, while Italian services activity shrank for a 10th month running in March as new business and employment levels in the sector declined, indicating economic recession in the euro zone’s third-largest economy will continue.

In the US the picture from this week’s crop of business surveys was more mixed. The manufacturing sector managed to outstrip expectations, but service sector growth slowed more than expected from February’s one-year high, according to the Institute for Supply Management.

Emerging markets also continue to enjoy the kind of growth that has been eluding much of the euro zone, with the latest PMI surveys from China, India and Brazil all showing expansion in March. – (Additional reporting Reuters)