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Ireland PMI September 2019

Ireland: Services PMI drops to over six-year low in September amid rising external headwinds

Business conditions in Irish service sector continued to ease in September, reflected by a drop in the AIB service Purchasing Managers’ Index (PMI) to 53.1 in September from 54.6 in August, marking the worst print since May 2013, largely owing to external headwinds. Nonetheless, the index remained above the critical 50-threshold that separates improvement from deterioration in business conditions, signaling a still healthy expansion in services activity.

Weaker demand in the domestic and overseas markets weighed on output and new orders, which both rose at notably softer rates. In particular, the expansion in overall new business slowed to an over six-year low, while new export orders contracted at the sharpest rate since July 2009, reflecting a marked downturn in orders from the UK amid ongoing Brexit uncertainty. Consequently, backlogs of work increased only modestly. Meanwhile, the rate of job creation was virtually stable at August’s 75-month low. On the price front, higher fuel, staff and rental costs pushed up input cost inflation slightly, prompting service providers to raise output prices at the fastest pace in four months. Lastly, on the outlook for activity in the service sector, Brexit uncertainty continued to weigh on sentiment, which sank to the lowest level in eight years in September.

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