Activity, job creation and confidence in the services sector continued to thrive in August, according to the latest NCB Purchasing Managers' Services Index, as companies hired more staff to meet expected increased demand.

The index recorded a score of 60.7 for business activity in August, with anything above 50 indicating an increase in the issue being measured. The figure for July was 63.1.

Activity rose during August at a faster pace than the average for the current expansionary period, though the rate of growth eased for the third month in a row.

"Strength in services sector activity continues to be a key driver of the Irish economic boom," said Dermot O'Brien, chief economist at NCB.

"In August, growth remained robust and, though the overall activity index softened a little, the pace of expansion in new business, order backlogs and employment strengthened. Moreover, optimism remains very high in private service industries."

Staffing levels increased again in August and have now increased each month for the past three years. A number of firms who took part in the survey said the higher staffing levels reflected expectations of future new business growth. The employment index for August was 59.7, up from 59.5 in July.

Input costs rose sharply during the month, scoring 64.7 in August (64.9 in July) with firms mentioning increased staff costs and the higher cost of fuel and energy. Output price inflation was modest, scoring 51.7, with firms commenting that they were restricting price increases in an effort to attract business. New business volumes increased in August and at a faster rate than in July (63.1 as against 62.6).

Overall business confidence, at 73.3, was optimistic. Only 2 per cent of firms expected business activity to be lower in 12 months' time.

Britain's services sector grew more slowly than expected in August as input prices surged and business expectations fell to their lowest level since the start of the Iraq war in 2003.