Ireland: Services PMI rises to four-month high in May
The Investec services Purchasing Managers’ Index (PMI) climbed to a four-month high of 59.3 in May, up from 58.4 in April, thanks to a buoyant economic landscape and more favorable weather conditions. The index thus moved further up from the 50-point threshold that separates expansion from contraction in the services sector, where it has been sitting for over five years.
Business activity grew at a faster pace in May and reflected a strong upturn in new orders, albeit more moderate than in April. New business from overseas markets gained pace and expanded at the fastest rate in 29 months, giving rise to a sharp accumulation in backlogs of work. The upturn was slightly weaker compared to the previous month, however. In response to the upswing in new orders and outstanding business, service firms took on more staff; the rate of job creation remained marked, albeit moderating from the previous month. Input prices continued on a sharp upward trend, due to higher oil prices and rising staff costs. Firms raised their output prices again in response, with the rate of inflation easing to a 19-month low. Higher workloads and easing cost pressures translated into juicier profit margins.
Commenting on the business confidence index, Philip O’Sullivan, Investec’s Chief Economist for Ireland, stated:
“While the forward-looking Confidence index rose at a slower pace last month, Irish services firms remain very upbeat, with the index remaining above the series average. Around eight times as many respondents predict a rise in activity over the coming year as against those who anticipate a decline.”