Rate of job growth in services sector at 10-month high
October proved to be a good month for the Irish services sector as it reported a 39th consecutive month of growth, albeit at the slowest pace of expansion since February 2014.
According to the Investec Services Purchasing Managers' Index business sentiment remained positive in the month in the face of optimism grinding to its weakest since August 2014.
Close to 59pc of panellists forecast an increase in activity over the next 12 months, with just 5pc predicting a decrease. Financial services was the only sector to register an improvement in confidence in the survey for October.
Backlogs of work in the sector have risen over the past 29 months while staffing levels were raised in October at the fastest rate in the last ten months.
Chief economist at Investec, Philip O'Sullivan said: "The headline Business Activity index came in at 60.1 from September’s 62.4 reading. While this implies the slowest rate of expansion since February 2014, the latest increase is still much quicker than the series average, while we also note that more than three times as many firms reported an expansion of activity during the month compared to those who posted a contraction. The overall sector has now reported 39 successive months of growth in output.
"A key highlight within this note is the strength in hiring implied by the Employment index. The rate of job creation accelerated in October to a 10 month high. Likely due to increased staffing levels and a more moderate pace of growth in New Business, we are not particularly surprised to see the Business Outstanding index also fall to its lowest level (albeit still remaining in growth territory) since February 2014.
"For a third successive month there was an easing in the rate of expansion in New Business. All four of the segments of the services sector that are covered by this report – Business Services, Financial Services, TMT and Travel & Leisure – recorded a moderation in the rate of growth in new orders compared to the previous month.
"This likely reflects the deterioration in the global economic outlook. With that being said, while the overall rate of expansion in the New Export index slowed for a second month, panellists once more identified the US and UK as key sources of overseas demand and given the recent softening of the euro against both sterling and the US dollar we suspect that favourable FX moves such as those will help to shield Irish exporters from the worst effects of the slower international growth," Mr O'Sullivan said.