Exports beyond eurozone help services sector hit three-month high

Ireland’s services sector expanded at its fastest rate in three months in April, aided by exports beyond the eurozone, a survey showed yesterday, in a boost for Irish growth prospects after weak manufacturing survey data.

The NCB Purchasing Managers’ Index (PMI) of services sector activity rose to 55.2 from 52.3 in March, comfortably above the 50 line that separates growth from contraction.

“This is a positive release that reflects the ongoing resilience in the Irish services sector,” said Philip O’Sullivan, chief economist at NCB Stockbrokers.

“We would expect these positive trends to be sustained over the coming months at least.”

Another NCB survey this week showed manufacturing activity shrank at its fastest rate in 19 months in April.

In contrast to much of the eurozone, bailed-out Ireland’s economy has expanded for the last two years, but it contracted in the third quarter of 2012 and was flat in the fourth as weak external demand weighed on exports.

O’Sullivan said it was non-eurozone markets that were cited by respondents as areas of particular strength. The overall new export business index was 54.6, putting its pace of expansion at an eight-month low.

Ireland’s services sector accounts for 70% of GDP, including public services not covered by the NCB survey.

Ireland expects its exports to grow 2.3% this year, helping the economy expand 1.3% compared to the 0.9% recorded last year.

And Britain’s dominant services sector recorded its strongest growth since last summer’s Olympics in April, a survey showed on Friday, adding to signs that the slow economic recovery may be gaining some traction.

The surprisingly robust reading will be a relief for the government, which has faced mounting criticism of the austerity programme it launched three years ago that has been hobbled by weak growth at home and around the world.

The Markit/ CIPS services Purchasing Managers’ Index rose to 52.9 in April, its highest reading since August and the fourth consecutive monthly rise. Economists in a Reuters poll had expected the index to stay at March’s level of 52.4.

The improvement was broad- based, supported by the strongest rise in new orders since last May.