Service sector growth at 10 month high
The services sector recorded its highest growth in 10 months in April as companies continue to display confidence despite Brexit, a new survey has shown.
The Investec Services Purchasing Managers' Index has improved to 61.1 in April from the previous month’s 59.1 reading.
The report also found that the rate of expansion in new business remains substantial, notwithstanding a cooling in the pace of growth in new export business to the slowest seen in the year to date.
In spite of the latter, services firms’ backlogs of work continue to increase and services companies continue to add to head-counts in an effort to meet the flow of new client demand and also put a dent into the stock of outstanding orders.
This latest news follows data this week showing that Irish manufacturing growth has expanded to a three month high in March, “driven by improved market conditions both at home and abroad”, Philip O'Sullivan, economist with Investec, said.
On the margin side, input costs continue to rise, which panellists have put down to higher payroll, fuel and insurance costs, however the report found that firms were able to pass on some of these costs to customers by increasing prices.
“All in all, there is a sense of déjà vu in the above, given that Tuesday’s Investec Manufacturing PMI release also pointed to stronger new business, expanding head-counts and some pressure from input costs. Taken together, this week’s reports suggest that economic activity in Ireland picked up at the beginning of the second quarter,” O’Sullivan said.
Confidence among businesses remains strong, with more than 10 times as many firms expecting to record growth in activity over the coming 12 months as opposed to those who anticipate a decline.