Ireland: Services PMI rises in May but remains in contractionary territory
June 4, 2020
The AIB services sector Purchasing Managers’ Index (PMI) rose to 23.4 in May from 13.9 in April, which had marked an historic low. Thus, the index inched closer, yet remained well below, the 50-threshold that separates contraction from expansion in business activity, as lockdown measures continued to dent the services sector.
May’s reading largely reflected softer downturns in business activity and news businesses compared to the previous month as demand remained dried up. As a result, employment continued to fall, with the rate of job shedding moderating only slightly from the month prior. On the price front, although input price inflation eased since April, prices declined for the second month straight, while output charge inflation fell at the quickest rate since April 2013 as firms tried to entice demand. Lastly, the 12-month outlook remained weak in May; however, overall, firms were slightly less pessimistic compared to April.
Commenting on the reading, Oliver Mangan, AIB chief economist, noted:
"Overall, this is another weak PMI report. However, we expect a rebound in activity from the current depressed levels will be seen over the summer months as lockdown restrictions are eased and the economy starts to open up again."
Author: Hanna Andersson, Economist