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Jobs growth in services best since 2006

Wednesday, March 05 10:25:37

The pace of job creation at Ireland's service providers picked up to its fastest pace since 2006, the latest Investec monthly Services Purchasing Managers' Index shows today.

It recorded a further sharp increase in business activity at Irish services companies in February, although the rate of expansion eased from the start of the year.

Growth of activity has now been recorded in each of the past 19 months. Where activity increased, this was mainly linked to rising new orders and improving economic conditions. While the headline PMI moderated to 57.5 in February from the previous month's 61.5, it is consistent with a strong rate of expansion and extends the current sequence of growth.

The index covers all private sector services in Ireland, excluding retail and wholesale, and provides timely data on an area of the economy that is not well covered by official figures. The data are derived from questionnaires sent to a representative panel of around 450 Irish private-sector service companies. The Service Sector economy is divided into the following areas: Hotels and Restaurants; Transport and Storage; Post and Telecommunications; Financial Intermediation; Renting and Business Activities; Other Services.

Philip O'Sullivan, Chief Economist, Investec Ireland, said, "The latest Investec Services PMI Ireland release shows that firms in the sector remain very confident about their future prospects. Unadjusted data for the four segments of the services sector which are covered by the report - Business Services, Financial Services, TMT and Transport & Leisure - show that all of them experienced growth during February."

One of the most striking aspects of this release is the Expectations component. Optimism among Irish services companies strengthened to the highest level recorded by the series since January 2004. Almost 65pc of panellists forecast activity to be higher in 12 months' time, compared with only 5pc who predict a fall. Unadjusted data show little variance in this bullish sentiment across the services sector.

In another sign of confidence, the Employment component shows that the rate of job creation quickened to the strongest since October 2006, with all four segments signalling growth for a third successive month. Panellists credited rising new business for this latest improvement in payrolls. Indeed, the New Business component (which posted a 19th successive above-50 reading) shows that improving economic conditions is encouraging clients to commit to new projects.

While the rate of growth in Export Orders slowed during February, it is still consistent with a high pace of expansion. Interestingly, Australia was cited as a particular source of new business.