Ireland: Growth in services slows to one-year low in November
December 5, 2017
The Investec services Purchasing Managers’ Index (PMI) dipped from 57.5 in October to 56.0 in November, the lowest reading since November 2016. Despite the decrease in the headline figure, the index remains comfortably above the 50-threshold that separates expansion from contraction in the services sector, where it has been for over five years.
November’s print was underpinned by slower expansions in business activity, new orders and employment. Growth in business activity reflected higher new orders, particularly from overseas markets. Higher new orders drove an increase in backlogs of work, which have risen uninterruptedly for four and a half years. Employment at services firms increased to meet higher demand requirements. Regarding price developments, output prices rose as service providers passed on higher input costs to buyers.
Commenting on the business expectations index, Philip O’Sullivan, Investec’s Chief Economist for Ireland, said:
“Despite the slightly slower pace of current growth implied by the headline PMI, Irish services firms remain upbeat about the outlook for the sector, with the Expectations index improving from the 13-month low that it fell to in October. A number of panelists expect new export orders to be a key driver of growth in 2018 and, given the improving international backdrop, we think that this is a very reasonable assessment of the sector’s prospects.”