Ireland: Services PMI climbs in August
The Investec service Purchasing Managers’ Index (PMI) climbed to 58.0 points in August, up from 57.4 points in July. The index remains above the critical 50-point threshold that separates expansion from contraction in the sector, where it has been for more than five years, and August’s reading signals more buoyant conditions in the Irish services sector.
Improved economic conditions in August fueled a sharp rise in new business, with the rate of expansion speeding up over the month. Increasing new orders from clients in the U.K. spurred a rise in new export orders from Irish service providers. As a result, backlogs of work climbed during August, although the pace at which it did so eased to a one-year low. Firms increased their in-take of workers, with the rate of hire rising to the highest in the year-to-date. On the price front, input prices climbed at a sharp pace, largely owing to higher fuel and staff costs. Output prices were raised accordingly to transfer the burden of cost-adjustment onto clients.
Commenting on the business confidence index, Philip O’Sullivan, Investec’s Chief Economist for Ireland, stated:
“Looking ahead, although the Business Activity: Expected Levels in 12 Months’ Time index slowed to its lowest level since October last year, its level is consistent with strong optimism amongst service sector firms […] Considered alongside the Investec Manufacturing PMI Ireland report, this week’s PMI releases suggest that the rate of growth in activity across much of Ireland’s private sector remains strong.”