Business activity, job creation and business confidence in the services sector continued to thrive in July, according to the latest NCB Purchasing Managers' Services Index, as companies hired more staff to meet increased demand.
"Growth in service sector activity remained strong last month, albeit marginally off recent highs," NCB chief economist Dermot O'Brien said. "Growth in new business is solid, employment is expanding robustly and confidence remains very high."
The seasonally adjusted business activity index, published yesterday, slipped to 63.1 last month from 65.3 in June. A reading above 50.0 indicates expanding activity, while one below that figure denotes contraction. While the pace of growth in July was the slowest since March, activity has risen for every month since June 2003.
Employment increased for a 35th consecutive month as firms recruited staff to help them expand capacity in response to faster growth in new business.
The employment index, though, weakened to 59.5 in July from 60.5 the previous month.
The business confidence index showed a reading of 73.4, up from 71.8 in June. More than half of the companies surveyed said they expected greater activity in a year's time because of recent marketing campaigns and planned expansion. However, almost a third of firms reported higher costs led by an increase in staff salaries and growing fuel prices. The index for input costs narrowed to 64.9 in July from 66.7, though remained above the average for the previous 12 months.
Meanwhile, the service sector throughout the euro zone moderated in July, having expanded at its strongest rate for six years in June, the RBS/NTC Research purchasing managers' index showed.
The report found that business activity in the sector, which accounts for about two thirds of the currency region's economy, fell to 57.9 last month, after climbing to 60.7 in June.
However, the July figure follows a month of particularly robust activity in the service sector, when Germany received a boost from staging the World Cup.
