Ireland: Services PMI drops sharply in January amid tightened lockdown measures
February 3, 2021
The AIB services sector Purchasing Managers’ Index (PMI) nosedived in January, dropping to 36.2 from December’s 50.1 and marking the worst result since May last year. As a result, the index fell below the 50-threshold that separates contraction from expansion in business activity.
January’s downturn largely reflected stricter lockdown measures amid the second wave of Covid-19. Total business activity fell sharply in the month, with the fastest decline seen in the transport, tourism and leisure sector. Moreover, new business declined at the quickest rate in eight months amid suppressed demand. Regarding employment, although it fell in January, it was only marginally and at a softer pace. On the price front, despite higher fuel, insurance, salaries and import costs, input cost inflation slowed in January, posting a six-month low, while output charges dropped somewhat as firms tried to bolster sales. Lastly, firms remained optimistic regarding the outlook for the coming twelve months in January amid hopes that the new vaccines should lead to a rebound in activity in H2 2021.
Author: Hanna Andersson, Economist