Wednesday 17 October 2018

Irish services firms remain optimistic as sector growth fastest since January

A snow-covered Cork Airport during the double hit of the Beast from the East and Storm Emma
A snow-covered Cork Airport during the double hit of the Beast from the East and Storm Emma
Louise Kelly

Louise Kelly

Irish services firms remain "very upbeat" as the confidence index in the latest Investec PMI report remains above average.

Business activity in the services sector has grown at the fastest rate since January, and activity has increased in each of the past 70 months.

Following March's extreme weather, business activity rebounded in April and accelerated even further last month.

Up to eight times as many respondents predict a rise in activity over in 2018 versus those who expect a decline.

While the rate of growth of new orders slowed slightly from the previous month, May's order rate remained strong and new export business expanded to its fastest pace since January 2016.

The report noted that higher new orders from UK clients helped strengthen overseas demand figures.

Growth in backlogs of work and the rate of increase in hiring activity was slightly lower than seen in April.

Meanwhile, higher fuel prices and increased staffing costs were noted as driving input costs up sharply.

According to the report, firms were able to pass on some of this pressure to end-customers but the rate of inflation in charges has moderated to a 19 month low.

However, stronger volumes still helped to deliver the fastest pace of expansion in the profitability index since the three months to end-August 2017.

"Taken together with last Friday’s Investec Manufacturing PMI (where the headline index improved to a three-month high), the May PMI reports suggest that growth in activity across much of the private sector in Ireland has rebounded after the weather inspired softness that was seen in Q1 2018," Investec's Philip O'Sullivan said.

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