Growth in the services sector slows in November
The growth in the Irish services sector has moderated to its slowest pace in 12 months, according to the latest Investec Services PMI report.
However the PMI reading for November was 56.0 (versus October’s 57.5 reading) showing that business activity in the sector continued to expand at a healthy pace.
Any mark over 50 is deemed growth.
In terms of client demand, the rate of expansion in new business eased in November, although it still remains sharp.
Some sectors experienced more of a slow down than others, in particular the technology, media and telecom sector’s growth rates cooled to the lowest in five months in November. However other sectors, including financial services and travel & leisure experienced a faster pace of growth.
New export orders rose at the same strong pace as had been recorded in October, with panellists reporting robust demand across all of Ireland’s key export markets, namely the US, UK and Eurozone.
Looking at margins, input prices increased at a sharp pace during the month, with panellists citing rising salaries, fuel and energy prices as contributing to higher costs.
To cover the rising costs Irish services firms hiked output prices for a 44 successive month in November, with the latest increase largely reflective of efforts to protect margins in the face of rising costs.
However despite these cost recovery moves, the rate of growth in the profitability index has moderated to the slowest since the period to end-February.
Commenting on the data, Philip O'Sullivan, economist at Investec, said that despite the slightly slower pace of current growth implied by the headline PMI, Irish services firms remained upbeat out their outlook.
"A number of panellists expect new export orders to be a key driver of growth in 2018 and, given the improving international backdrop, we think that this is a very reasonable assessment of the sector’s prospects," Mr O’Sullivan said.