Ireland's services sector grew at its slowest rate in six months in February but business expectations indicate improved activity this year, a survey showed this morning.

Robust exports have eased growth and the government expects the economy to expand by 1.5 per cent this year.

The NCB Purchasing Managers' Index (PMI) of activity in the services sector, which accounts for roughly 60 per cent of the Irish economy, eased back to 53.6 from January's five-year high of 56.8. But the index remained well above the 50 line that separates growth from contraction.

Growth in new export orders also eased after two months of expansion, with the subindex pulling back to 56.7 from peak growth levels of 63.5 seen in January - the highest rate since the poll began in June 2002.

"There was a moderation in the pace of growth in exports during February, however, this must be considered in the context of January's outturn, which represented the fastest growth rate in the history of the series," said NCB Stockbrokers chief economist Philip O’Sullivan.

Despite a struggling domestic economy with high unemployment and austerity, businesses forecast activity to be higher in 12 months' time than current levels, with expectations gathering pace for the second successive month.

Companies have reduced their prices charged in each month since August 2008, as a mismatch in input and output prices weigh on profitability in the sector.

A separate survey last week showed that manufacturing sector activity gained pace in February from a nine-month low, contrasting Ireland to the contraction in factory activity for the euro zone as a whole.

Other data released last week showed that Ireland's unemployment rate fell to a two-year low of 14.2 in the fourth quarter of last year, boosting hopes that the struggling domestic economy may soon begin to recover.

Reuters