Optimism in the services sector remains high despite major cost pressures and the possibility of war in Iraq, according to new statistics from NCB. Growth of overall business activity levels in the Irish services economy was sustained in February, according to the NCB Purchasing Managers (Services) Index.

Growth was reported by firms despite the negative sentiment caused by events in the Middle East.

February's data signalled the 15th consecutive month-on-month rise in activity levels in the services economy, said NCB. Incoming new business helped to keep activity levels high in February.

However, on the downside, staffing levels were cut for the eight successive month in February, as firms faced pressure to lower their costs so their output prices would be more competitive.

The only area not reporting improved activity levels was the technology, media and telecoms sector. In this sector, according to NCB: "The fall in activity was recorded at a pace equal to that seen in January and reflected a more marked contraction of incoming new business in the sector."

NCB, based on responses from relevant firms, said this sector suffered from a significant growth of costs and an increasing dependence on "price competition" to promote growth of new business.

The other sectors covered by the survey - business services, financial services and transport, travel, tourism and leisure - all reported increased activity levels.

On inflation, firms said costs had risen sharply in February with wage inflation remaining strong and rising oil prices hitting a cross-section of firms.

In relation to business confidence, services firms remained "generally unperturbed" by the current uncertainty in global markets.

Most firms concluded that any negative implications for their businesses would be "limited and short-lived".

"Although there was some degree of negative sentiment surrounding issues relating to the current Iraq crisis, the majority of firms maintained an upbeat outlook for activity at their units in one year's time."

Meanwhile, the services sector, which accounts for the bulk of the US economy, expanded for a 13th straight month in February but at a more modest pace said a new report.

The Institute for Supply Management said its index of non-manufacturing business fell to 53.9 in February from 54.5 in January. Economists had expected a reading of 53.4.

A number above 50 denotes expansion while a reading below 50 shows contraction.

The sector encompasses a vast array of businesses including banking, restaurants and entertainment.