The services sector is showing signs of a tentative recovery according to the latest NCB survey which recorded an upturn in confidence among service providers.
The NCB Purchasing Mangers' Services Index, a lead indicator of conditions in the service sector posted a reading of 51.9 in June. A reading above 50 indicates an expansion in activity.
The July figure was the second successive month of expansion after the index flatlined in April and May. Overall the level of activity was the highest recorded since December last year.
Commenting on the results, Mr Eunan King senior economist at NCB, said confidence is higher and new business also accelerated modestly, but he warned, "Competition is restraining prices charged while input costs, mainly wages and insurance continue to rise."
Firms reported that new business grew by the fastest rate in five months as market uncertainty surrounding the Iraq war and SARS was removed.
However firms continued to shed staff as cots were brought into line in the face of tougher competition. The employment index fell to 48.1 indicating a fall in staffing levels.