Ireland: Irish Services PMI drops to over two-year low in October
November 3, 2016
The Investec Services Purchasing Managers’ Index (PMI) dropped from 56.2 in September to 54.6 in October, the lowest reading for Ireland since February 2014. The result reflected a softer expansion in activity, new business and employment. Despite October’s drop, the index remains above the 50-threshold that separates expansion from contraction in the services sector, where it has been for over four years.
October’s reading reflected another soft expansion in business activity and new orders, the latter of which expanded at the slowest rate since May 2013. Respondents said that the weak new orders reading reflected client uncertainty and a fall in the British pound owing to Brexit jitters. Business sentiment in October improved from September’s 37-month low and services firms employed more staff. New business and business activity increased, but the former has experienced a sustained slowdown since the Brexit vote. Regarding price developments, input prices roses on the back of higher costs for energy and insurance costs, which ultimately contributed to increasing output costs.
According to the survey report, however, growth in demand still provides some positive news: “while the rate of growth in demand may have moderated, it is still in positive territory and it is reassuring to see that the rate of growth in Backlogs of Work quickened to a five month high in October. This prompted services companies to take on staff at a faster rate than had been recorded in September.”