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.”