Irish services growth follows manufacturing to two-year low - PMI

DUBLIN (Reuters) - Ireland's services grew at their slowest rate in more than two years in April, matching a similar drop in manufacturing, as uncertainty at home and abroad weighed on new business, a survey showed on Thursday.

The Investec Purchasing Managers' Index (PMI) of activity in services fell to 59.8 from 62.8 in March, further below the 64.0 it reached at the start of the year. That was the highest since June 2006, the height of the "Celtic Tiger" economic boom.

The index, which covers businesses from banks to hotels, has been above the 50 mark denoting growth for more than three and a half years. The authors said, however, that some panellists reported political instability had led to delays in getting contracts confirmed.

"We understand that this relates to a combination of the EU referendum in the UK and the drawn-out process around the formation of a new government in Ireland since the general election held on February 26," said Philip O'Sullivan, chief economist at Investec Ireland.

A referendum will be held in June on whether Britain, one of Ireland's main trading partners, should remain a member of the European Union.

In addition, Ireland has faced 10 weeks of political deadlock following the February elections. Acting Irish Prime Minister Enda Kenny said on Wednesday he hoped that would end this week with the formation of a new minority government.

The uncertainty helped push the sub-index measuring new business to a 26 month low of 60.2 from 61.7 in March. Business growth across the euro zone was slow but steady last month, a survey of the entire bloc showed on Wednesday.

Irish manufacturing growth also slowed to its lowest rate in two and a half years in April, data showed on Tuesday. A slowdown in global markets hit new orders in the euro zone's fastest-growing economy.

"Taken together, this week's PMI reports suggest a somewhat weaker start to Q2 for much of Ireland's private sector," O'Sullivan said.

(Reporting by Padraic Halpin, editing by Larry King)