Ireland: Services PMI continues to slide at the outset of the year
The Irish service sector continued to lose strength at the outset of the year, with the AIB service Purchasing Managers’ Index (PMI) declining to 54.2 in January from 56.3 in December. The index, thus, moved closer to the critical 50-point mark that separates expansion from contraction in the services sector; it has remained above the threshold for over five years now. January’s print reflects the weakest expansion in service sector activity since May 2013. That said, the reading still represents a solid pace of expansion in the sector and sits well above well above the flash January Services PMI for the Eurozone, which was 50.8.
Weaker growth in output and new orders, owing to less favorable demand conditions, underpinned the fall in the index. As a result, backlogs of work rose at a slower pace, with the rate of accumulation the weakest in over two years. Moreover, the rate of employment eased considerably. On the price front, input prices rose—mainly on higher staffing costs—although the increase in overall costs was more moderate in January compared to the previous month. Service providers hiked up their output prices in response, albeit at a slower rate, to pass the burden of cost adjustment onto consumers.
Commenting on January’s print, Oliver Mangan, AIB Chief Economist, stated:
“Overall, though, the January AIB Services PMI signals a somewhat slower start to 2019 for the economy, after the robust rate of expansion recorded in the past number of years. It suggests that growth in the Irish economy is likely to slow this year, which is hardly surprising given the loss of momentum in the global economy in recent times.”