Our service exports fall as sterling hits orders
Export orders in Ireland's services sector dropped to a five-month low as a result of fewer orders from the UK due to the weakening in sterling, a survey has found.
And the expansion in new business was the weakest for around two and a half years, according to the latest Purchasing Managers' Index (PMI) for the sector.
Despite this, the sector overall recorded a marked increase in activity.
Business sentiment improved for the second month in a row, with half of all respondents to the survey predicting a rise in activity in the second half of the year, suggesting little concern about the lasting effects of the Brexit vote.
But Philip O'Sullivan, economist at specialist bank Investec, sounded a note of caution.
"While the improvement in the headline PMI is welcome, we note a further moderation (for a third successive month) in new business, with this index now expanding at its weakest pace since February 2014," Mr O'Sullivan said.
"The rate of expansion in the new export business index tumbled to a five-month low, with some respondents reporting lower new orders from the UK, in part due to the strength of the euro compared with sterling following the result of the UK's referendum on EU membership."
The seasonally adjusted Business Activity Index, which is based on a single question in which companies are asked to report on the change in business activity at their companies compared to one month ago, rose fractionally to 59.7 in August from 59.5 in July.
But although business continued to rise last month, the rate of growth eased for the third successive month, and was the weakest since February 2014.
"While some panellists mentioned improvements in client demand, others reported weakness following the UK's decision to leave the EU," the PMI report noted.
New exports orders also rose, but at the weakest pace since March. But the rate of job creation intensified, rebounding from a 38 month low recorded in July. Mr O'Sullivan said companies continue to exhibit a positive outlook.
"Data for the sub-components of the Services sector that are covered in this survey (Financial Services, Business Services, TMT and Transport & Leisure) show that firms across all four sectors expect to see growth over the coming year, as they have for 51 successive months now," he said.
It comes just days after the manufacturing PMI showed that the sector here recorded a small increase in orders during August. Despite the growth, the report noted a cautiousness surrounding manufacturers given the current economic climate.