Ireland: Services PMI dips in January
The Investec services Purchasing Managers’ Index (PMI) declined from 60.4 points in December to 59.8 points in January. Despite the drop, 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.
January’s print came on the back of sharp expansions of new orders, business activity and employment. Growth in new orders accelerated from last month’s strong increase due to higher demand from new clients. Increased workloads compelled firms to hire additional staff for the 65th consecutive month, although the staff intake rate decreased to an eight-month low. Despite a higher headcount, backlogs of work accumulated sharply. Regarding price developments, input costs increased on the back of higher costs of raw materials and employees. Service providers increased output prices to maintain profit margins, although competitive pressures among firms limited price increases.
Commenting on the business expectations index, Philip O’Sullivan, Investec’s Chief Economist for Ireland, said:
“The forward-looking Expectations index improved to a four-month high, helped by positive sentiment on the economic outlook both at home and abroad. This positive disposition is broad-based, with all four segments of the services sector that are captured by this survey – Business Services, Financial Services, Travel & Leisure and TMT – simultaneously posting above-50 readings for this component for a 68th successive month. Given the improving global backdrop, we think that Irish services firms are right to be upbeat on their future prospects.”