Services sector growth slips again in June
Growth in the service sector fell month on month in June, following a 10-month high in April, with new domestic business orders expanding at a slower pace.
Strong client demand resulted in another monthly increase in new business. However, as was the case with business activity, the rate of growth slowed from May.
The news was more encouraging for new export business, where the rate of growth has quickened to a three month high, according to the latest data from the Investec Services PMI report.
Surprisingly, given the volatility of the sterling, a number of panellists cited the UK as a particular source of new business wins.
“The ratio of those expecting growth to those anticipating a decline is standing at more than 8:1. Given the generally improving international backdrop, we think that this optimism is warranted,” Philip O’Sullivan, economist with specialist bank Investec, said.
The growth in new orders has led to a continued increase in both business outstanding and employment, with nearly six times as many respondents reporting increases in headcounts as opposed to those who have reduced theirs.
On the margin side, average input prices once again rose at a sharp pace in June, with panellists blaming higher staff costs for this.
As has been the case for 39 months now, firms were able to pass some of the cost on to consumers by hiking average prices charged.
The profitability index remained in positive territory for an eighth successive survey period, helped by stronger volumes.
Taken together with the Investec Manufacturing PMI Ireland release earlier this week, the June survey suggests that overall there has been very solid overall expansion for manufacturing and services in the first six months of the year.
The data suggests that there has been a slight improvement in the three months to 30 June in the growth rate for manufacturing and a marginal moderation in the rate of expansion for services.