Irish services exports buck the trend with November increases
IRISH services exports bucked the downward economic trend in November, thanks to sales of services like software into the still robust US market.
Exports from Ireland increased in November, despite new figures showing the eurozone economy is shrinking faster than predicted.
The latest services sector purchasing managers index (PMI) from NCB Stockbrokers shows that the trend of hi-tech exports is set to continue, despite the slowdown in Europe.
The PMI index measures growth in the private sector on a scale either side of 50; growth is recorded as a number above 50. A PMI number 0 signifies economic decline.
In Ireland in November, the services sector PMI rose to 52.7 from 51.4. In contrast, data for the eurozone as a whole shows the economy contracted sharply over the same period.
The latest eurozone PMI means the economy is set to shrink by 0.6pc in the fourth quarter -- worse than any forecast, according to Markit, which prepares the data.
In fact, Ireland and Germany were the only eurozone countries to see a rise in activity in November.
The German and Irish economies are heavily geared towards export sales to countries outside the common currency area. "The eurozone economy is slowing down, but there is still growth in the wider global economy -- including the US -- and Ireland is benefiting from that," said Brian Devine of NCB Stockbrokers.
In most European countries, the size and strength of the services sector was closely linked to the domestic economy, but that wasn't true in Ireland, he said.
"In Ireland, financial services includes areas like fund management and aircraft leasing and then you have the software sector and its offshoots. Those areas really have nothing to do with demand in the Irish economy," said Mr Devine.
NCB said it thought the services sector could continue to grow, even with a slowdown in Europe. That's because the latest data shows that new orders, as well as existing contracts, increased in November.
The services sector has already grown for 11 months in a row.
Growth has failed to translate into jobs, however. Jobs in the services sector have fallen for the past seven months.
Technology, media and telecoms (TMT) is the only area where job numbers are increasing. Activity in the TMT sector -- which includes software and cloud computing -- is the fastest growing area of the services economy. The financial services area increased at the fastest pace in almost two years.
Ireland will not be able to escape a eurozone slowdown forever, especially if it tips the world economy into recession.
The eurozone PMIs show that is an increasingly real threat.
"The major eurozone countries are all now contracting and face the risk of recession," said Chris Williamson, chief economist at Markit.
"Italy is faring the worst, with the survey suggesting that GDP could collapse by 1pc in the fourth quarter. France and Spain are likely to see their economies contract by around 0.5pc."
Mr Williamson said Germany --the eurozone's biggest economy and the key stakeholder of any debt crisis cure -- was suffering only a mild downturn at the moment, but added that a steep drop in new orders reported by factories last month signalled worse to come.