Ireland PMI May 2016


Ireland: Services PMI improves notably in May

June 3, 2016

The Investec Services Purchasing Managers’ Index (PMI) rose from April’s 26-month low of 59.8 to 61.7 in May. With May’s result, the index is further above the 50-threshold that indicates expansion in the services sector. The PMI has been in expansionary territory for nearly four years.

May’s reading mainly reflects faster expansions in new business and business activity. New orders rose for the 46th consecutive month and new exports orders expanded as well. Growth in new orders came on the back of business from new clients. An expansion in new business contributed to an accumulation of backlogs of work, which, in turn, resulted in higher staffing by Irish service firms. Regarding price developments, higher staffing costs pushed input prices up and compelled firms to pass higher costs on to consumers.

According to the survey report, “Services companies remain upbeat on the outlook, with Business Sentiment in strongly positive territory, while nearly 12 times as many companies expect to see an improvement in activity over the coming year as opposed to those who expect to witness a deterioration. “All in all, this is a very positive report, which is just the tonic after a downbeat Manufacturing PMI release earlier this week. In any event, we expect to see stronger readings from both PMIs later this year, assuming our base case that UK voters choose to remain in the EU comes to pass.”

FocusEconomics Consensus Forecast panelists expect investment to expand 11.8% in 2016, which is up 0.1 percentage points from last month’s forecast. For 2017, the panel sees investment rising 7.7%.

Author: Jean-Philippe Pourcelot, Economist

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Ireland PMI Chart

Ireland Services PMI May 2016 0

Note: Investec Services PMI. Readings above 50 indicate an expansion in the services sector while readings below 50 indicate a contraction.
Source: Investec and Markit.

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