Services sector expanding, says survey

IRELAND’S services sector expanded significantly in October, with new business growing rapidly, a survey showed yesterday.

The Purchasing Managers' Services Index, compiled by NCB Stockbrokers, rose to 57.3 from 56.9 the previous month posting its highest level since April 2002 and remaining above the no-change mark of 50.0 for the fifth consecutive month.

"The latest report shows a further strengthening of the recovery in services sector activity that first emerged in June," NCB chief economist Dermot O'Brien said in a statement.

"Confidence in the sustainability of the recovery also continues to rise and employment in the sector now looks like it is on a rising trend again," he added. The business expectations component of the index rose to 76.9 from 75.3 last time its highest level since June 2002.

Meanwhile, European service industries, the biggest part of the region's economy, expanded at the fastest pace in almost three years in October amid increased demand for travel and financial products. The index of which the NCB PMI is a composite part is based on a survey of 2,000 purchasing managers in the dozen euro nations. Service companies are reporting rising earnings as the euro nations' $8 trillion economy improves.

"We're already clearly feeling the effects of a recovery," said Miguel Horta e Costa, chief executive officer of Portugal Telecom SGPS SA. "I'm sure that these indications will be maintained in the fourth quarter."

Executives across Europe are becoming more upbeat, according to a European Commission survey.

However, European growth is still lagging US expansion.

The world's biggest economy grew at the fastest pace in almost two decades in the third quarter.

Britain's service industries expanded last month at the quickest pace since November 1999, a survey of 500 companies by NTC Research showed. Faster growth in the British economy will prompt the Bank of England to raise interest rates tomorrow for the first time in three-and-a-half years, according to 38 of 44 economists surveyed by Bloomberg News.