Business activity in the services sector continued to grow last month, the latest NCB Purchasing Managers Index reveals.

The seasonally adjusted index rose to 58.1 million, up from January's figure of 57.8. Any move above 50 indicates growth.

Those surveyed said growth reflected strong demand for new products and the successful impact of marketing.

Employment in the sector also remained solid, while the rate of job creation was slightly lower than in the previous month. Firms said additional workers were hired to handle rising levels of incoming new business.

Almost 60 per cent of respondents forecast activity growth, with expectations of the continued strength of the domestic markets cited as a factor underpinning confidence.

The data also indicated another sharp increase in average costs facing Irish service providers. This was widely attributed to rising staff salaries. NCB chief economist Dermot O'Brien said: "Though external conditions may be uncertain, the services sector PMI shows that domestic economic activity is firing on all cylinders.

"Growth in business activity and employment is robust and confidence levels are high across the board."