Irish services sector growth hits 7-year high in June

Ireland’s services sector grew at the fastest rate in seven years in June as firms hired more staff, capping the strongest quarter for the sector since the financial crisis, a survey showed on Thursday.

Employment has been growing strongly, with the jobless rate down to below 12 per cent from a high of 15.1 per cent two years ago.

The Investec Purchasing Managers' Index of activity in the services sector, which covers businesses from banks to hotels, rose to 62.6 in June from 61.7 in May - above the 50 point line denoting growth and the highest reading since February 2007.

Gross domestic product (GDP) data for the first quarter of the year will be released later today after the economy surprisingly contracted at the end of last year as consumer spending fell and export growth remained sluggish.

“Thursday’s Q1 National Accounts release will provide the first ‘hard data’ on the performance of services exports since the start of the year. The improvement in the export index of the services PMI bodes well in that regard,” Investec Ireland chief economist Philip O’Sullivan said.

The services’ sector index has remained above 60.0 for the past three months compared to an average reading of 59.9 in the first quarter. It follows a poll on Tuesday where manufacturing activity grew for the 13th successive month.

The subindex for employment among service firms rose to 59.6 from 56.6, the 22nd month of job growth in a row and the second-highest reading since October 2006.

“Given the recovery underway both at home and across Ireland’s key trading partners, we believe that this confidence will prove well-founded and expect to see further strong services PMI readings over the coming months at least,” said Mr O’Sullivan.

Reuters