Exports to the UK drive four month high in services sector
The services sector grew to a four month high in September, driven by a growth in exports.
In particular the new export business component experienced substantial growth, partly driven by higher demand from the UK, with increased overseas demand quickening to the fastest rate since February.
The UK’s increased demand for services was in sharp contrast to the manufacturing sector, where demand for export orders was hurt by the sterling weakness.
Helped by this strong demand, the business outstanding component rose at its fastest pace for eight months.
In an effort to address this, firms took on extra staff during the month, helping the employment component continue a sequence of above-50 readings that commenced in September 2012.
Any mark above 50 is deemed growth.
Looking at margins, average input costs rose at a sharp pace, with firms attributing this to rising costs of materials and higher salaries.
In response to this firms hiked the average prices they were charging, although this was not enough to prevent a moderation in the profitability index.
Overall the Purchasing Managers Index (PMI) in the services sector accelerated to 58.7 in September, from August’s 58.4 out turn, according the latest Investec Services PMI Ireland.
"Business sentiment strengthened sharply and was the highest in 2017, as predictions of further improvements in economic conditions supported optimism that activity will increase over the coming year," Philip O'Sullivan, economist at specialist bank Investec, said.