Ireland: Expansion in Services PMI quickens in July
August 3, 2017
The Investec Services Purchasing Managers’ Index (PMI) rose from 57.6 in June to 58.3 in July. The result reflected faster expansion in activity, new orders and employment. With the increase, the index remains comfortably above the 50-threshold that separates expansion from contraction in the services sector, where it has been for five years.
July’s reading reflects stronger growth in business activity and new orders. Growth in new business was buttressed by stronger economic conditions, which also supported a rise in business activity. New business from abroad logged the fastest expansion in four months due to increased demand from key markets such as the United Kingdom and the United States. Increased demand for Irish services resulted in the 50th consecutive accumulation of backlogs of work and a corresponding increase in staffing. Regarding price developments, rising employment costs drove input costs higher and pushed output prices as firms passed on higher costs to consumers.
Commenting on the Expectations Index, Philip O’Sullivan said that, “We note that the forward-looking Expectations Index weakened to an eight month low in July, although it is important to highlight that more than nine times as many firms expect growth in activity over the coming 12 months compared to those who foresee a decline. Looking at the sub-sector data, the main area that saw a dip in optimism was the Travel & Leisure component. It is possible that speculation around Ireland’s future (post-Brexit) trading relationship with the UK could be slightly dampening the mood here, as that component is more reliant on UK business than the other parts of the industry that are captured by our survey