Ireland: Services PMI climbs to three-month high in April
The Investec services Purchasing Managers’ Index (PMI) rose to a three-month high of 58.4 points in April from 56.5 points in March, driven by favorable demand conditions. The index thus moved further above the 50-point threshold that separates expansion from contraction in the services sector where it has been sitting for over five years.
April’s reading reflected an accelerated pace of expansion in business activity fueled by strong demand from both domestic and overseas markets. Foreign demand for Irish services increased at the quickest pace in close to two-and-a-half years. New business rose at the swiftest pace since last October. The upturn in total new business put pressure on the capacity of service providers’ operations and led to increased backlogs of work. To cope with the rising new business, firms hired more workers, with the rate of job in-take climbing to the highest pace in the year-to-date. Input costs rose on the back of higher labor costs, along with a jump in prices for insurance and fuel. Firms passed on part of the additional cost burden in April, although output inflation weakened to the lowest rate in one-and-a-half years.
Commenting on the business confidence index, Philip O’Sullivan, Investec’s Chief Economist for Ireland, stated:
“The forward looking Confidence index improved to a seven month high, suggesting that there is more to the stronger readings in this report than just the absence of the inclement weather that dampened the previous month’s performance. In any event, this week’s Manufacturing and Services PMI releases point to a bright start to the second quarter of the year for much of the private sector.”