Growth in business activity 'sustained'

Growth in business activity was sustained in July, according to the NCB Purchasing Managers’ Services Index, published today.

Volumes of new business increased and employment gains were also recorded.

Rising to a level of 59.4, up from 56.8 the previous month, the seasonally-adjusted Business Activity Index signalled expansion for the 14th consecutive month.

Firms reported that July’s improvement was in line with increased volumes of incoming new business during the month, as well as continued efforts to promote and advertise services in the hope of stimulating further demand in the months ahead.

Commenting on the survey, NCB Stockbrokers’ senior economist Eunan King said: "The Services Sector PMI mirrored the strength seen in the manufacturing index, rising to 59.4 from 56.8.

“This was the highest level of the Index since November 2003.

“New Business, at 60.8 was at its best level since December 2000 and rose strongly compared to June.

“The sharp upturn in business outstanding suggests the recovery will continue and bodes well for employment.

“The employment index bounced sharply from the June dip.

“Pricing power remains muted. The overall economy appears to be in good shape."

Growth in overall business activity was recorded for the 14th consecutive month in July, and to a greater extent than in the previous month.

Firms continued to report that as well as pushing ahead with marketing and sales initiatives, they were also responding to the latest increased intake of new business, while trying to cope with mounting backlogs of work.

The data also signalled a 14th successive monthly improvement in incoming new business in July.

Furthermore, the extent of the latest gain exceeds that recorded in June.

Panel firms continued to report that clients had been receptive to new marketing and advertising activities.

An 11th successive monthly gain in net staffing levels was recorded in July.

Firms reported that they had responded to the sustained period of increased new business at their units, and the resulting pressure on backlogs of work.

However, the need for increased capacity was again balanced against efforts to restrict cost growth.

Measured overall, July’s data showed the 16th successive monthly decline in rates charged by service providers.

Reports of strong competition and the need to offer incentives to clients in order to stimulate growth in new business were widespread.

Meanwhile, service providers continued to face strong inflationary pressure in July.

The high price of oil played a major role in driving up costs, while rising wage and salary claims were also reported by a number of panelists.

July’s data showed that business expectations regarding activity levels in one year’s time remained strongly positive.

Service providers expressed confidence in further economic recovery, and there was a shared belief that rising volumes of new business will be sustained, promoting continued growth in activity.