Recovery in the services sector has started to translate into job creation, according to the latest Purchasing Managers' Index (PMI).
The NCB PMI for December remained buoyant at 58.8 compared to 59.5 for November - the seventh straight monthly rise and second strongest performance since April. But perhaps just as significantly the employment index rose to 53, its sharpest climb in nearly two years and the fourth monthly increase in a row. A reading of 50 or above indicates growth.
Unsurprisingly, business confidence continued to soar - at 78.5 from 76.9 in November - despite mounting inflationary pressures.
Commentators say the results show the services sector closing the year on a brisk note.
"The services sector ended 2003 on a high note with the seventh successive month of expansion, employment up for the fourth month in a row and business confidence at its highest level for 20 months," said Mr Dermot O'Brien, NCB chief economist.
Predictions of a recovery in the IT industry appear to be borne out by the survey, which shows the highest level of activity among technology, media and telecoms firms at 66.3. Business and financial services also reported expansion at 57.4 and 60.5 respectively. However, the slump in transport, travel, tourism and leisure continued, with the sectoral index dipping to 45.9.
Predictably, business confidence was most pronounced in IT and telecoms, which reached 85.2 on the expectations index (from 84.8 in November). Confidence in business and financial services slipped marginally to 73.4 and 75.6 respectively. But there was renewed optimism among transport, travel, tourism and leisure operators, where expectations climbed to 79.6 from 77.8 in November.
However, cost pressures were up again, to 57.9 from 59.4 in November. The highest rate of increase was in tourism, at 60.9 from 58 in the previous month. Inflation remains a worry across the board, with increases reported in business services (57.7), financial services (54.3) and technology, media and telecoms (53.4). Payroll pressures were a chief driver of inflation, NCB found.
The competitive marketplace forced companies to lower their own prices, leaving the index for prices charged languishing at 49. Only business services raised prices (50.4). The sharpest rate of decline was reported in financial services (44.1).
