Wednesday 11 December 2019

Irish service sector reports sharpest rise in activity in a decade

A crane transports a shipping container at Dublin port
A crane transports a shipping container at Dublin port

Colm Kelpie

Ireland's services sector enjoyed its sharpest rise in activity for a decade last month.

One of the biggest rises in new business in the survey's history helped to support the fastest expansion in activity since the prior to the financial crisis, the latest Purchasing Managers' Index for the sector showed.

Philip O'Sullivan, chief economist with specialist bank Investec, said that taken with the manufacturing data released earlier in the week, the surveys suggest that the strong momentum across the Irish economy in 2015 has spread into the new year.

"The latest Investec services PMI Ireland report confirms that the sector has made a very impressive start to 2016," Mr O'Sullivan said. "The headline PMI improved to 64 in January, implying the sharpest rate of growth since June 2006."

Anything above 50 signals expansion in the sector. Activity has now risen in each of the past 42 months.

The rate of expansion in new business also quickened in January, and was the joint fastest since August 2000.

New orders have risen continuously throughout the past three-and-a-half years. Increasing new orders also contributed to a rise in outstanding business in January, with the latest accumulation the strongest since February 2007. A sharp rise in input costs was experienced in January, as the effect of higher wages and salaries outweighed the downward impact of lower fuel costs.

Elsewhere, a separate survey found that Eurozone businesses started 2016 in slightly better shape than first thought but January's pace of growth matched only the weakest seen in the past year, adding to pressure on the ECB to ease policy again.

"A disappointing Eurozone PMI survey for January indicated one of the weakest expansions seen over the past year and raises the prospect of further stimulus," said Chris Williamson, chief economist at survey compiler Markit.

"Growth of activity, order books and employment all lost momentum, but perhaps most worrying of all from a policymaker's perspective is the intensification of deflationary pressures."

Markit's final Composite Purchasing Managers' Index, seen as a good guide to growth, came in at 53.6, just beating an earlier flash estimate of 53.5 but considerably below December's figure of 54.3.

Price cutting failed to have any meaningful impact on the bloc's dominant service industry. Its PMI slipped to a year-low of 53.6 from 54.2, as predicted by the flash estimate.

(Additional reporting by Reuters)

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