Ireland: Services PMI edges up in June
July 4, 2018
The Investec service Purchasing Managers’ Index (PMI) edged up to a five-month high of 59.5 in June from 59.3 in May, thanks to favorable economic conditions. The index sits well above the critical 50-point threshold that separates expansion from contraction in the services sector, where it has been sitting for over five years.
June’s robust print was underpinned by a sharp acceleration in new orders from both domestic and overseas markets, which drove an upsurge in profits. There was a notable rise in new orders from the U.K. and the U.S., both of which are key export partners of Ireland. The strong growth in new orders led to a marked expansion in backlogs of work. To meet the upturn in client demand and business expansion plans, service companies increased their payroll numbers for the seventieth consecutive month, with the rate of job in-take rising to the fastest in the year-to-date. Higher prices for energy, fuel and insurance, along with a rise in employment costs were behind the overall rise in input costs. Service providers raised their output prices in response, with the rate of inflation climbing up to a three-month high.
Commenting on the business confidence index, Philip O’Sullivan, Investec’s Chief Economist for Ireland, stated:
“The forward looking Business Expectations index strengthened in June, pointing to greater optimism by services companies. Allied to the increase in Employment growth to the fastest pace in the year to date, it is clear that Irish services companies are upbeat on the prospects for the sector. Given the positive international backdrop, we share this optimism.”