Jobs increase as services sector maintains growth for fourteenth month

THE services sector continued its strong growth and created more jobs last month, according to a leading economic survey published yesterday.

The Purchasing Managers' Index (PMI), a monthly survey carried out by stockbrokers NCB, showed the services sector grew for the fourteenth month in a row in July.

NCB economist Eunan King said the survey showed that the services sector was mirroring the strength seen in Irish manufacturing. The index rose to 59.4 in July, up from 56.8 the previous month and comfortably ahead of the key 50.0 mark that represents the difference between positive and negative conditions. Mr King said there were positive signs in relation to new business, employment and levels of work in progress. "The overall economy appears to be in good shape."

NCB said firms reported greater business activity and they were pressing ahead with sales and marketing initiatives. These initiatives were being well received by client companies. Business confidence remained strong as companies said rising volumes of new business would be sustained and would drive further growth.

Employment levels were up for the eleventh month in a row as firms responded to greater demand by hiring more staff. But work backlogs continued to stack up as businesses kept a tight rein on costs and walked a tightrope between increasing capacity and taking on people that would not be needed if demand slipped back.

NCB also noted pressure on service providers arising from intense competition and rising input costs. Prices charged by service providers fell for the sixteenth successive month. Many businesses needed to offer incentives and discounts to clients in order to win new business. Service providers also complained about higher oil prices and repeated pressure from staff for higher pay, which squeezed margins as businesses were unable to pass on higher costs to their customers.

Signals were positive across all industry sectors. Business services activity was ahead for the twelfth month in succession, while financial services continued an 11-month positive run.