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"The services sector continued to grow rapidly in May with business activity and new business accelerating as well as backlogs of work. Employment continued to grow, though at a marginally slower pace than in April. However, the pace of input price inflation accelerated again and prices charged declined for the fourteenth successive month."
Dermot O’Brien – Chief Economist at NCB

Growth of overall business activity in the Irish services economy was sustained in May. The latest results from the PMI survey showed the twelfth successive monthly expansion, and the seasonally adjusted data showed growth at a similarly marked pace to that recorded during the previous month. In fact, after accounting for seasonal factors, the Business Activity Index rose slightly, posting 59.2 in May, against a level of 58.7 in April. 

The survey 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 data. The data are derived from questionnaires sent to a panel of around 600 Irish private services companies that have agreed to supply regular information on trends in their activity levels. Monthly data have been collected since May 2000.

Activity and demand Overall growth in the services economy remained strong in May and the data showed that activity increased for the twelfth consecutive month. Expansion was recorded at a similarly marked pace to that in the previous month, and reflected further  growth of incoming new business.  The data showed that growth in new service sector business had remained widespread. Panellists indicated that success in securing new contracts was  a reflection of improved market sentiment, as well as continued promotional and marketing activity.  Employment Net gains in services employment were recorded for the ninth consecutive month. Furthermore, the expansion recorded by the May survey was at a similarly marked rate to that of the previous month and a number of firms reported that job creation  had been a reflection of strong growth in activity and new business.
Inflationary pressures Evidence from May’s survey told how high oil and material prices, coupled with rising wage bills, kept upward pressure on average costs in the services economy. The latest data showed that the rate of inflation picked up somewhat compared to that recorded in April.  Meanwhile, May’s data showed a decline in average service charges for the fourteenth successive month. Firms reported that competitive pressures had prevented them from raising rates and that, in a number of cases, price promotions had been needed to help secure new business.
Business confidence Sentiment for activity levels one year from now remained positive and widespread in May. Although the degree of optimism eased, the overall belief amongst panellists was that growth will be achieved over the course of the next twelve months. The upbeat outlook was a reflection of current buoyant conditions and the willingness of clients to commit now to longer-term and advance contracts.

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Whilst every effort has been made in the preparation of this report to ensure accuracy of the statistical and other contents, the publishers and data suppliers cannot accept any liability in respect of errors or omissions or for any losses or consequential losses arising from such errors or omissions.

NCB
The NCB Group is a leading financial services company based in Dublin with a wide domestic and international client base. Its main activities are in Stockbroking (private client and institutional), Bonds, Moneybroking, Corporate Finance, Venture Capital Investment and International Funds Listing.

NTC Research
NTC is one of the world’s largest specialist providers of business research and information, operating business surveys on behalf of blue chip clients. Current research includes continuous surveys providing original data on economic conditions in the UK, Germany, France, Italy, Spain, Netherlands, Austria, Ireland, Greece, Russia, Poland, the Czech Republic Hong Kong and Japan. NTC surveys are widely used by governments, businesses and the financial markets.

NTC, Farm Road, Henley-on-Thames, Oxon, RG9 1EJ. Tel: +44 1491 418700. Fax:+44 1491 571188. www.ntc-research.com