Growth in the services sector picked up last month after hitting a four-year low in September, though the rate of growth remained slower than the sharp increases recorded throughout 2006, new figures released yesterday showed.

The NCB purchasing manager's services index recorded a level of 56.5 in October, up from 54.8 in September, with growth being seen in all areas of activity. The index has now remained above the critical 50 mark, signalling expansion, since June 2003.

Dermot O'Brien, chief economist at NCB Stockbrokers, said October's rebound suggests that the September survey may have been influenced, partly at least, by worries about the ramifications of the recent turbulence in the credit markets.

"If so, such concerns have clearly receded and business confidence strengthened noticeably," he said. "All main activity components of the survey shared in the October rebound and their latest readings suggest that the private services sector, which accounts for more than 40 per cent of economic activity in Ireland, is in robust health ."

For the first time in five months, activity increased in all four broad service areas of business; financial, technology, media and telecoms (TMT) and travel and tourism. Growth was strongest at TMT companies, with the rate of expansion only slightly down on September's 46-month high and following declines in the previous three months, while activity in the travel and tourism sector increased marginally.

Confidence amongst services firms increased, as did staffing levels, as companies reported an improvement in underlying demand. This, along with the launch of new services, contributed to a marked expansion of new order volumes.