Ireland: Services PMI falls back to contractionary territory in September
The AIB services sector Purchasing Managers’ Index (PMI) dropped to 45.8 in September, from 52.4 in August. As such, the index slid below the 50-threshold that separates expansion from contraction in business activity, suggesting that the recovery lost steam.
September’s downturn was largely driven by a decline in activity as new business dropped amid elevated uncertainty stemming from the health crisis. New exports dropped at the fastest pace in three months, while the volume of outstanding business declined for the seventh month running, prompting firms to reduce staffing levels once again, with the transport, and tourism and leisure sectors being the most impacted. On the price front, input costs rose for the third consecutive month, largely owing to higher transport charges and increased labor costs, following the end of the temporary Covid-19 wage subsidy scheme. Consequently, firms increased output charges for the first time in seven months. Lastly, although the outlook was optimistic in September, sentiment slipped for the third month running and remained historically subdued.