Services sector returns to growth

Ireland's services sector returned to growth in January, lifted by continuing demand for exports, but underlying trends remained weak.

The NCB Purchasing Managers' Index, which measures activity in the services sector, rose back above the 50 mark that separate contraction and growth, reaching 53.9 in January after December's 47.4 reading.

"Some bounce was expected given the adverse weather conditions and the fact that the NCB PMI is a seasonally adjusted month-on-month comparison," said Brian Devine, economist at NCB Stockbrokers.

Overall business confidence rose for the second month in a row, reaching its highest level since September last year.

However, despite a rise in new export business to 55.1, overall new business continued to contract, recording 47.7 for January and making it the fifth consecutive month that it has fallen.

"Once again this provides evidence of the two-tiered nature of the Irish economy – buoyant exports, depressed domestic demand," Mr Devine said.

Employment also continued to decline, but at 49.5 the rate of contraction was marginal. NCB said it expects this to begin to level off in 2011.