Activity in Ireland’s services sector grew for a fifth month in succession in December on the back of the biggest surge in new export orders since September 2006.

The latest NCB Stockbrokers purchasing managers’ index of activity in the sector fell slightly to 55.8 in December from 56.1 the previous month. However, it remained comfortably above the 50 mark which separates contraction from growth.

The index is compiled from a survey of more than 600 companies, ranging from hotels and hairdressers to IT firms and telecoms.

Both the sub-indices for new orders and new export business were in positive territory again last month, pointing to continued momentum in the sector.

The volume of new export business received by Irish service providers rose for the 17th successive month, with December’s figure of 61.3, the highest recorded since September 2006 and the third highest rate recorded since its inclusion in the index a decade ago.

The NCB’s sub-index for new business also grew sharply, with survey respondents mentioning launch of new products and also more new business from overseas markets, with the Middle East and UK cited as areas of particular strength.

Also encouraging was the rate of job creation in the sector which grew for the fourth successive month to remain at a five-year high.

The survey indicated three of the four components of the services sector - travel and leisure, business services and technology, media and telecommunications recorded growth in staffing levels during December while financial services remained unchanged.

The NCB’s survey did, however, point to an ongoing mismatch between input costs, which increased for 25th successive month and output charges which have been in negative territory since August 2008. “This continues to weigh on profitability in the sector,” said NCB economist Philip O'Sullivan.