Ireland PMI May 2020

Ireland

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."

FocusEconomics Consensus Forecast panelists project fixed investment to contract 25.8% in 2020, which is up 7.7 percentage points from last month’s forecast. For 2021, the panel sees fixed investment growing at 9.6%.


Author:, Economist

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Ireland Services PMI May 20 20

Note: Investec Services PMI. Readings above 50 indicate an overall increase in business activity compared to the previous month, and below 50 an overall decrease.
Source: AIB and IHS Markit.


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