Ireland: Services PMI improves, but remains in negative territory in October
November 4, 2020
The AIB services sector Purchasing Managers’ Index (PMI) rose to 48.3 in October, from 45.8 in September. However, the index remained below the 50-threshold that separates contraction from expansion in business activity for the second consecutive month.
October’s reading largely reflected a continued decrease in activity—albeit at a softer pace than in September—as new business contracted due to frail demand conditions amid renewed Covid-19 restrictions and increased uncertainty. The overall level of outstanding business fell for the eighth month running, pushing firms to cut staff levels again, albeit at a slower rate compared to the previous month.
On the price front, input costs rose in October due to higher freight charges and costs related to remote working adjustments. As such, firms increased output charges for the second month straight and at a quicker pace than in September. Lastly, although the outlook was positive in October, sentiment slipped to the weakest level since May largely owing to increased uncertainty over the evolution of the pandemic and its related restrictions, as well concerns over a no-deal Brexit.
Author: Hanna Andersson, Economist