Business confidence remains high, with the services sector continuing to perform strongly but staff shortages are adding to cost pressures.
The Purchasing Managers' Services Index, compiled by NCB Stockbrokers, recorded a reading of 60.1 in February compared with 60.7 in January and is well above the no-change mark of 50. The index covers all private-sector services in the Republic, excluding retail and wholesale. The information is based on questionnaires sent to 350 Irish private services firms.
According to the survey, almost 40 per cent of firms increased activity levels in response to sustained growth in demand for their services but the reading does reflect a slowdown in the pace of growth since last summer's peak. Several firms blamed further easing in the degree of economic buoyancy in domestic and global markets for slower growth.
In February the index also showed further cost pressures with input costs showing a more rapid increase rising from 68.2 in January to 66.2 last month.
Many firms have indicated that a reduction in oil prices has contained the rate of increase to a greater extent than in January although the price of many oil-related products is still being influenced by last year's high oil prices. "High wage and salary demands and the effects of the BSE crisis on volatile food prices also fuelled price inflation," according to NCB.
Overall the survey records continuing optimism on the economic activity expected over the next 12 months. It also showed that the rate of growth of employment eased slightly again in February in line with slower growth in new business.
Growth in the euro-zone services economy fell to a 23month low in February, according to the Reuters Eurozone Business Activity index. Based on a survey of more than 1,500 service firms, the index fell 0.9 in February to 54.4, the lowest reading since March 1999.
