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Saturday, July 04, 2009
ENCOURAGING signs emerged from the services sector last month as companies say they are looking to the future with optimism.
The latest NCB purchasing managers’ index showed Ireland’s services sector shrank in June at the slowest pace for more than a year.
The index rose to 42.5 in June from 39.5 in May, the highest level since May 2008, with the gauge of business expectations at a nine-month high of 54.8 — well above the 50 mark which signals growth.
NCB economist Brian Devine said it is encouraging to note that optimism among service sector firms is gradually improving.
"While the economic contraction is undoubtedly going to be severe as the fundamental pressures continue to weigh on the economy, the pace of decline is likely to be less severe going forward as pessimism fades," he said.
The PMI survey’s employment component indicated the sixteenth successive month when firms cut jobs. However, the rate of job shedding was the slowest since October 2008.
A separate PMI survey this week showed Ireland’s manufacturing sector contracted at the slowest pace in June since September.
Meanwhile, figures for the services sector in Europe showed business optimism has hit a near two-year high on hopes that the worst is over. The index in June hit 44.7, but this was down from May’s seven-month high of 44.8.
There was evidence of divergence in the big four economies in the region.
Data showed activity in Germany’s services sector fell at the same pace as in May, while in France and Spain the sector shrank at a slower pace.
Data from Britain showed its dominant services sector expanded for a second month in June but the pace of recovery slowed as new business contracted.
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