THE IRISH services sector grew at its fastest pace in more than 2½ years in June.

According to the NCB Services Purchasing Managers’ Index, the sector, which is considered key in terms of creating jobs, saw a rise in both new orders and exports during the month, with the overall index increasing from 52.4 in May to 55.4, its fastest rate since October 2007.

The new business component of the index grew to 54.0, while new export business was at its highest level in almost three years. Business activity rose for the third month in a row.

NCB economist Brian Devine predicted growth in gross national product (GNP), which excludes the contribution of foreign-owned businesses operating in Ireland, of 2.8 per cent in 2011.

However, despite the renewed optimism about the economy, unemployment levels will not drop significantly in the near future. The employment sub-index of the survey was 47.5, indicating continued contraction.

“The services sector is the key sector in terms of employment creation and as such the rise in output in this sector is encouraging,” Mr Devine said. “It will, however, take some time before the rise in output filters through to net job creation.”

NCB said the unemployment rate would average 13.7 per cent this year before reaching 12.6 per cent in 2011.

Britain’s services sector grew last month at its slowest rate for 10 months, held back by subdued new business and a record monthly drop in confidence.

The CIPS/Markit services PMI headline activity index fell for the third time in four months from 55.4 in May to 54.4 in June. That was weaker than the consensus forecast and the lowest level since August 2009.Separately, Germany’s services sector expanded in June but generated less new business than a month prior.

Euro zone retail sales rose moderately in May after a sharp decline in April, data showed yesterday, pointing to continued weakness in consumer spending and a fragile economic recovery. Eurostat said retail sales in the 16 countries that share the euro rose 0.2 per cent during the month and 0.3 per cent since May last year.