ACTIVITY IN Ireland’s services sector rose in April for the first time in 27 months, fuelling speculation that the economy may be emerging from recession.

The latest NCB Purchasing Managers’ Index rose to 51.0 last month from 49.6 in March, breaking through the 50 barrier separating growth from contraction. The sub-index measuring new business rose to 51.4 from 48.2, also the first time in positive territory since January 2008.

The Government has said it expected the economy to return to growth in the second half of the year following the euro zone’s longest running recession, though some economists say growth could already have taken place in the first quarter.

“It will be sometime before the end of the recession is felt on the ground, but technically at least it looks to have come to an end,” said Brian Devine, economist at NCB Stockbrokers, interpreting the PMI data.

A PMI survey of the manufacturing sector earlier this week showed Irish manufacturing output in April grew at the fastest pace in 10 years, contributing to a further improvement in the overall conditions in the sector.

“April data indicated that Irish service providers remain optimistic regarding the prospects for future activity levels,” said Markit, which compiles the data.

In the wider euro zone, the services sector grew at a slightly faster pace last month than initially thought.

The upbeat report suggested that the financial crisis that has gripped Greece and has stoked speculation about the financial health of other smaller euro zone countries so far has not dealt a major blow to overall economic activity.

The report also pointed to only minimal economic impact from the plumes of volcanic ash from an erupting Icelandic volcano that paralysed much of European airspace for several days during the month. – (Additional reporting, Reuters)