CIARA O’BRIEN

The Irish services sector expanded in march, but the rate of growth slowed for the second month in a row.

The NCB Services Purchasing Managers' Index recorded a reading of 52.3 last month, with growth in new exports fuelling an overall rise in the index measuring new business. That was the eighth consecutive increase for new business, and the 20th for new exports.

Some 26 per cent of firms reported a rise in overall business activity over the month; only 18 per cent said it fell.

The growth in new business also had a knock on effect for employment, which registered a reading of 53.4 for the month.

But higher fuel costs continued to put pressure on service providers,pushing up input prices despite competition keeping average prices charged lower. This had a negative impact on profitability.

"In all, the key positive from this morning's report is the continued strength in New Export Business," said NCB chief economist Philip O'Sullivan. "Services exports were an important contributor to Irish economic growth last year, with total export growth of 2.9 per cent driven entirely by strength in the services sector. Indeed, in 2012, Ireland's services exports exceeded goods exports for the first time on record."

He noted that the forward looking index measuring expectations and business sentiment reflected "solid optimism", with new export business to remain a key source of growth over the coming year.