Services sector – rapid growth in October

Ireland’s services sector grew rapidly in October thanks to the fastest rise in new business in 6-1/2 years, a survey showed today, as the bailed-out economy gains momentum before completing its international aid programme.

The Investec Purchasing Managers’ Index (PMI) of services sector activity rose for the 15th straight month to 60.1 in October, up from 56.8 in September.

That was far above the 50 mark that separates growth in activity from contraction and was the second-highest reading this year after August’s figure.

The subindex for new services business also rose to 60.1, climbing from 57.4 in September, in its fastest expansion since March 2007.

“Both the new business and new export components saw their rate of expansion accelerate during October, with the UK cited as a key source of new export orders during the month,” said Investec Ireland chief economist Philip O’Sullivan.

“For some months now we have been expressing confidence that growth will accelerate into 2014 on the back of a stabilising domestic economy and improving export markets, with today’s report providing more comfort to that view.”

Ireland is a much-needed success story for European austerity policies and is due to finish its EU/IMF programme in Dec, but has only just emerged from recession and economic growth remains anaemic.

The services sector, which covers a range of businesses running from banks to hotels, accounts for 70 percent of Ireland’s gross domestic product.

The survey, compiled by Markit, covers all private sector services in Ireland, excluding retail and wholesale, and is based on questionnaires sent to around 450 Irish private-sector service companies. Source: Reuters