Ireland: Services PMI slides in July as export sales contract at the sharpest rate in nine years amid Brexit uncertainty
August 6, 2019
Business activity in the Irish service sector lost traction again in July, reflected by a drop in the AIB service Purchasing Managers’ Index (PMI) to 55.0 from 56.9 in June. Nonetheless, the index remained above the critical 50-point threshold that separates improvement from deterioration in business conditions, pointing to strong growth in the services sector.
Easing demand from domestic and overseas markets drove a slowdown in new orders and output. In particular, export sales declined for the first time since November 2016 and at the swiftest pace since July 2009, with Brexit uncertainty especially weighing on UK business. As a result, backlogs of work, while still solid, rose at the slowest rate in three months. Nevertheless, firms continued to hire more workers, although the rate of job creation weakened markedly. On the price front, the cost burden climbed on higher wages and increased transport and fuel costs. That said, overall input cost inflation slid to a 16-month low, which prompted firms to raise output prices at a softer rate. Lastly, business sentiment fell to a three-month low in July on ongoing Brexit uncertainty, but remains positive on expectations of higher sales and new product developments.
Author: Nihad Ahmed, Economist