Growth in Ireland’s services sector slowed last month but confidence hit a seven-year high on the back of positive sentiment in the wider economy.

The latest Investec Purchasing Managers' Index (PMI) of services sector activity fell to 57.1 in November from 60.1 the previous month but was still comfortably above the 50 mark, which denotes an expansion in activity.

The services sector, which ranges from hotels and hairdressers to IT firms and telecoms, accounts for about 70 per cent of the economy’s output.

It has now recorded growth for 16 consecutive months.

Investec’s sub-index which measures optimism regarding the 12-month outlook rose to 75.1 from 74 the previous month, its highest level since October 2006 and before the crash.

The sub-index for new business rose to 61.3 from 60.1 in October, its fastest rate since March 2007, with respondents indicating improved client confidence as a key factor leading.

The rate of growth in new export business also accelerated in November with firms highlighting the UK as a source of higher new orders.

Another positive was the continued monthly growth in employment with firms increasing their staffing levels on the back of increased workloads.

While the rate of growth in job creation was little-changed from the previous month it well above the series average.

“All in all, the report serves as another reminder of the relative improvement underway in the Irish economy,” Investec Ireland economist Philip O’Sullivan.

“In particular, the continued strength in staffing levels tallies with recent employment data from the CSO showing annual growth of 3.2 per cent in the workforce.”

However, an uneven set euro zone PMIs kept pressure on the European Central Bank to do more to stimulate growth.

The French service sector slumped back into contraction in November with activity even weaker than initially thought, a survey showed, raising the risk that the economy may return to recession.

Italy’s service sector tumbled back into contraction in November after a timid recovery in the previous two months.

In contrast, Germany’s composite PMI, which monitors manufacturing and services activity, jumped to a 29-month high of 55.4 as firms took on more staff to meet the orders flooding in.

Similarly, a composite PMI in the US bounced into positive territory on a back of an expansion in the services sector.

In Britain, the services PMI fell back slightly to 60.0, but this was still the fifth highest reading since December 2006.