The services sector expanded at sharpest rates for more than five-and-a-half years in May, but cost pressures are also growing rapidly, according to a new report.
This NCB purchasing managers index of the services sector registered a reading of 66.2 in May up from 65.6 in April and well above the 50 mark that indicates expansion.
Of the 600 service firms sampled for the survey, around 47 per cent recorded an increase in activity since the previous month. Growth in services has now been reported for thirty-six consecutive months.
Eunan King, senior economist at NCB, said: "The Services Sector PMI indicated the most rapid rate of growth since 2000, a time when the Irish economy grew at a 9 per cent pace. New business continued to grow strongly and employment remained close to its fastest pace in over five years."
However he added that costs continued to rise strongly and prices rose at the fastest pace since 2002. Firms pointed to rising staff and energy costs as the main drivers of inflation.
Employment in the services sector has increased in each month since September 2003, and firms commented that the latest rise reflected an improvement in demand and plans for company expansion.