Ireland: Services PMI falls in December to 13-month low
January 4, 2019
The Investec service Purchasing Managers’ Index (PMI) dropped to 56.3 in December, from 57.1 in November, thus moving closer to the crucial 50-point threshold that separates expansion from contraction in the services sector, where it has been for over five years. December’s print reflects the slowest growth in activity in the sector in 13 months.
While the latest reading was underpinned by weaker growth in output, new orders rose at a swifter rate as a greater number of new clients expressed an interest in services. Firms in Technology, Media and Telecoms (TMT) recorded the sharpest upturns in business activity of all the main sectors. Demand in both domestic and overseas markets picked up, fueling the growth in new business. Backlogs of work increased accordingly, although the rate of accumulation eased to a 27-month low. Service providers consequently hired more workers, with the employment rate accelerating sharply. Meanwhile, higher fuel, utility and insurance costs, along with a rise in wages pushed up overall input prices. Firms raised output prices in a bid to pass on the burden of cost-adjustment onto consumers. Business sentiment among service providers was more upbeat, with firms expressing greater optimism that output will rise over the next year on a recovery in the domestic economy and rising demand in foreign markets.
Author: Nihad Ahmed, Economist