Growth in Ireland's services sector recovered in June from May's near four-year low, the NCB/NTC purchasing managers' survey showed today, but the reading was still the second weakest since June 2004.
Companies in the survey, ranging from insurance brokers to hotels, became less optimistic about how strong business would be in 12 months' time, despite a pick up in new business growth and job creation.
The headline measure of business activity rose to 56.9 comfortably above the 50 level that divides growth from contraction but, apart from May's 45-month low of 54.9, it was still the weakest since a 56.8 reading in June 2004.
NTC Economics, which compiles the survey, said June's reading was "well below the average for the past year".
The business expectations measure fell to a nine-month low of 70.9 last month from 72.2 in May and some companies pointed to anticipated weakness in the construction sector.
Overall, though, 49 per cent of respondents expected an increase in business activity in 12 months' time versus 7 per cent who predicted business would be worse.
"The services sector picked up again last month with strong growth in new business and employment. Confidence remains high. This underpins our view that the economy remains in good shape," said Eunan King, senior economist at NCB Stockbrokers.
Mirroring an improvement seen on Monday in June's NCB Purchasing Managers' Index (PMI) for Ireland's manufacturing sector, Irish services companies reported increased demand both from domestic and export clients.
That helped push the new business component of the services PMI up to 57.4 from 55.3 in May, although it was still well below the 64.4 recorded a year ago.
Staffing levels increased at a sharper pace than the average for the current 46-month growth period, with the employment growth rate reaching 56.2 versus 55.5 in May and 54.6 in April.
"Many panellists suggested that extra staff were recruited to service increased new business volumes," NTC said.