Service sector still growing

FURTHER strong growth has been reported in June in the services sector.

Sustained growth was recorded for the 13th month running, with incoming business showing a marked improvement over the month of May.

Results from the latest NCB Purchasing Managers’ Service Index cover all private sector services, excluding retail and wholesale, and are taken from a sample of 600 service companies.

NCB economist Eunan King said that “overall activity continues to grow strongly, though it is not accelerating”.

But the “encouraging” factor is the steady improvement in the level of expectations among panel firms.

He warned, however, that competition, which has been a feature of the sector for some time, was likely to remain “tough” with input prices continuing to rise and margins are feeling the pressure.

In the case of incoming business, panelists said the pattern of previous months continues to show that clients are spending more and the level of confidence is increasing.

The side effect of the continuing upturn has been a boost to jobs. Higher employment was achieved for the 10th consecutive month in June, but the pace of growth was somewhat less.

In response to the upturn, companies have in many cases increased their advertising and marketing activities to capitalise on the improved conditions.

Reports from the survey continued to highlight the impact of higher oil prices and rising wage bills on average costs.

While inflation eased in June, it remained substantial, affecting firms from across the service sector.

Meanwhile, only a small portion of those who took part in the review were able to pass on the higher costs.

However, business confidence in June was high with respondents positive about the reality that levels of activity at their units will be higher in a year’s time.

The firms’ positive outlook for June is attributed to the continued improvements in new business during recent months and the fact that activity levels will have to rise to deal with the gradual build-up in the backlog of work.