Monday 1 May 2017

Business activity in services sector grows for its ninth month

ECONOMY

Donal O'Donovan

Donal O'Donovan

BUSINESS activity in the Irish services sector grew in September, for the ninth month in a row, according to new figures published last night.

Technology exports led the trend but there is no sign of growth translating into new jobs, according to the latest Purchasing Managers Index (PMI) from NCB Stockbrokers.

Irish figures show that growth was led by a significant rise in the volume of exports of hi-tech services. Globally the services sector staged a comeback last month, showing signs of recovery after growth slowed to a 25-month low in August.

Growth in exports of services shows Ireland is reaping a dividend for investing heavily to attract the world's leading technology companies here, according to NCB Stockbrokers chief economist Brian Devine.

Bringing the likes of Google, Twitter and Facebook to Ireland is boosting investment, employment and confidence, he said.

Overall growth was modest but steady in September, continuing the trend of recent months.

The services sector includes everything from banking and hotels to software and hairdressing, and accounts for most private sector employment.

However, nine months of growth have so far failed to translate into extra jobs.

In fact, the rate of job losses accelerated to its fastest pace in 17 months in September. Employment has fallen every month since May.

Even modest and jobless growth in the services sector is a welcome contrast to weaker manufacturing figures published earlier in the week.

Figures elsewhere showed positive signs in some of Ireland's most important export markets.

Markets

For global markets, the most important data out yesterday were on US jobs numbers. The data showed an increase of 91,000 in the numbers at work in the US last month, beating expectations for a gain of 75,000.

The global acceleration in services in September was mainly driven by the US, where growth of all-industry output hit a six-month high.

The pace of growth picked up in China but slowed sharply in France and India.

The UK saw a burst of new activity in its services sector last month, surprising analysts after weak numbers in August.

Economists are watching the monthly figures closely for any evidence of the euro area falling back into recession.

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