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Growth in services sector reaches a nine-year high

Growth in the country’s services reached a nine-year high in July, marking three years of unbroken expansion as new business rose to levels last seen a decade and a half ago, a survey has shown.

Ireland’s economy grew by 6.5pc year-on-year in the first three months of 2015, data showed last week, on track to become the fastest-growing economy in Europe for the second year running in 2015.

The Investec Purchasing Managers’ Index of activity in services, which covers businesses from banks to hotels, rose to 63.4 in July from 63.3 in June.

The new business sub-index climbed to 66.2 from 63.7 in June, the third-highest mark since the series began in 2000.
The PMI index has stayed above the 50-point line that separates growth from contraction since July 2012. A comparable survey gave a reading of 54.0 for the Eurozone as a whole.

A strong increase in employment was recorded during the month, and was marginally quicker than the rate of creation seen in June.

Although the weak euro helped some firms secure new work from UK clients, it also put pressure on average input costs for businesses, which rose at their fastest rate since September 2008.

Some respondents were able to pass on higher costs to clients in July, thereby resulting in a 16th consecutive monthly rise in prices charged.

Businesses sentiment was strong, remaining unchanged from June, with most companies very confident in their outlook for the coming 12 months.

“It is clear that services firms in Ireland retain a high degree of optimism on the outlook for their sector,” Investec Ireland chief economist Philip O’Sullivan said.

“It is no surprise to see that the pace at which services companies in Ireland are increasing their headcounts picked up, albeit slightly, in July, with just over nine times as many firms increasing their staffing levels compared to those who are lowering theirs.

“Given the improving dynamics around the domestic economy we believe that this positivity is well-founded.”

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