Irish services sector confidence suffered before Brexit vote
Published 06/07/2016 | 02:30
Ireland's services companies recorded further steep increases in activity last month, but business confidence dipped sharply to the lowest in almost three years ahead of the Brexit vote.
And growth in the UK's service sector slipped to its lowest in over three years.
In Ireland, while higher new orders were predicted to provide support to activity over the coming year, some businesses expressed caution ahead of last month's referendum, according to the latest Purchasing Managers' Index for the sector, which was carried out before the vote took place.
Philip O'Sullivan, economist with specialist bank Investec, said the UK referendum vote was impacting as polling day drew nearer.
"The individual components of the Services PMI suggest cautious positioning on the part of firms and their clients ahead of the vote, with most increasing at a slower pace than in the previous month," Mr O'Sullivan said.
"The new business component rose at a sharp but reduced pace in June, with more than three times as many panellists reporting a rise in new business against those who signalled a decline.
"The rate of growth in new export business moderated slightly in June, with some panellists signalling reduced interest from UK clients." The seasonally adjusted business activity index posted 61.2 in June, from 61.7 in May, showing the rate of expansion eased slightly from the previous month.
Rising new orders also led employment to increase last month.
The rate at which outstanding business rose was solid, although slightly lower than in May.
Employment also increased in the month, but the rate of job creation eased back to its slowest level since May of 2014.
Goodbody Stockbrokers said that given the close economic links between Ireland and the UK, a further slowdown in the services sector is to be expected over the coming months.
In the UK, uncertainty in the run-up to the vote on EU membership slowed service sector growth last month to a three-year low and sent business expectations to their weakest since the end of 2012.