DUBLIN (Reuters) - Irish private service sector activity grew at the fastest pace in almost 5-1/2 years in January, a survey showed on Tuesday, in an early boost to hopes that economic growth will gain momentum in 2013.
Ireland needs its economic expansion to accelerate to get the public debt, set to peak at 121 percent of gross domestic product this year, on a downward trajectory. The government expects the economy to expand by 1.5 percent this year compared with a forecast 0.9 percent in 2012.
The NCB Purchasing Managers' Index (PMI) for the services sector rose to 56.8 in January from 55.8 a month earlier, moving even further above the 50 line that separates growth from contraction. The index has now been in positive territory for six months running.
It was the highest index reading since August 2007, a year before Ireland's financial crisis took hold and eventually pushed the country to take an EU/IMF bailout in late 2010.
"This is a very encouraging Services PMI release," said Philip O'Sullivan, chief economist at NCB Stockbrokers.
"These positive dynamics are encouraging employers in the services sector to take on more staff, with the employment index increasing at its fastest rate since Q1 2007... We expect the recent positive trends to continue over the coming months."
Overall, Ireland's services sector accounts for a hefty 70 percent of GDP, although that includes public services not covered by the NCB survey.
As well as the sharp rise in employment, the sub-index monitoring new export business was in positive territory for the 18th month in a row, rising to 63.5 from 61.3 in December, the highest reading since the sub-index began in June 2002.
A number of respondents indicated that they had been able to secure new external clients during the month amid signs of improving global demand, data collator Markit said.
Those tentative signs of increased external demand were seen in flash figures for January published last month showing that while services activity in the euro zone was still contracting, it had recovered to a 10-month high.
A separate survey last week showed that Irish manufacturing activity expanded for the 11th consecutive month in January, but at the slowest pace in nine months as the flow of new orders contracted for the first time in a year.
Reporting by Padraic Halpin; Editing by Hugh Lawson