Services sector indicates first signs of growth after four-month lull

The services sector grew for the first time in four months in August, a survey showed yesterday, as a rise in new business at home and abroad helped shelter Ireland somewhat from a slump in the rest of the eurozone.

The NCB Purchasing Managers’ Index (PMI), which measures activity in the services sector, rose to 51.7 in August from 49.7 in July, moving just above the 50 mark that separates growth from contraction.

The modest growth in Ireland contrasts with flash figures for the eurozone as a whole which showed a seventh successive month of contraction last month. The flash survey fell to 47.5 as the bloc’s debt crisis hammered business and consumer confidence.

While the Irish services index has so far not been as positive as last year, when it grew every month bar December, optimism among companies continued to improve in line with consumer sentiment, which surged to a five-year high in August.

“More than 43% of respondents forecast activity to be higher in 12 months’ time than current levels, compared with around 17% that predicted a decrease,” Markit, which compiles the data, said in a note.

“Where optimism was recorded, panellists mentioned signs of improving economic conditions. That said, the modest rise in activity was slower than the series average.”

The increase in August’s headline figure was driven by a jump in new business to 52.6 from 49.5 a month earlier. The sub-index has now posted growth in five of the eight months this year, compared to just four months in 2011.

New business from abroad grew more quickly than overall new orders, with new export orders growing for the 13th month. Markit said respondents indicated they had been able to increase market shares in some markets during August.

A separate survey on Monday showed that manufacturing growth slowed markedly in August from a 15-month high a month earlier, although unlike in most of Europe, stayed above the line separating growth from contraction.

Reuters