Ireland: Irish Services PMI edges up in August
September 5, 2016
The Investec Services Purchasing Managers’ Index (PMI) increased slightly from 59.5 in July to 59.7 in August. The result reflected a mild improvement in client sentiment, which had been on a downward trend since the UK voted to leave the EU on 23 June. With August’s uptick, the index is now further above the 50-threshold that indicates expansion from contraction in the services sector. The PMI has been in expansionary territory for four years.
Business confidence recovered slightly in August on the back of heightened optimism regarding improvements in economic conditions and business expansion plans. A growing economy and robust domestic demand contributed to higher activity and better expectations. Nonetheless, new orders from the UK decreased for yet another month, prompting a softer rise in overall new orders in August. Slower activity in foreign client demand also caused a weaker increase in new business, which recorded the lowest rise in two-and-a-half years. Regarding employment, the rate of job creation accelerated, rebounding from July’s 38-month low. Output prices increased amid efforts to improve margins and to pass on higher input costs.
According to the survey report, “while the improvement in the headline PMI is welcome, we note a further moderation (for a third successive month) in New Business, with this index now expanding at its weakest pace since February 2014. The rate of expansion in the New Export Business index tumbled to a five month low with some respondents reporting lower new orders from the UK, in part due to the strength of the euro compared with sterling following the result of the UK’s referendum on EU membership.”