Services sector growth reaches nine-year high

Optimism among service sector firms remains high, on the back of June bringing the strongest level of business growth in nearly nine years.

The latest edition of the monthly services purchasing managers’ index from Investec Ireland shows a 63.3 point reading for June. The index is seen as the main barometer of health for the sector.

Not only is June’s reading ahead of the 50-point mark, which separates a sector in growth mode from one which is contracting, it is also almost two points better off than May’s 61.4 mark and is the highest this year.

The latest data also shows the strongest rise in activity, within the sector, since September 2006; with new business growth picking up pace, profitability up for the 19th straight month and reaching its fastest increase for a year and employment growth close to May’s five-month high.

“Activity has now risen in each of the past 35 months, while nearly five times as many panellists have reported a rise in activity against the number that are experiencing a decline,” said Investec’s chief economist Philip O’Sullivan.

Meanwhile, despite a marginal slowing from May’s 15-month high, optimism around business activity over the next year remains high.

“Given the improving signs around both the key export markets for services firms based here and the domestic economy, we believe that this optimism is well-founded,” said Mr O’Sullivan.