Wednesday 22 January 2020

Jump in foreign business pushes pace of job creation in services to five-month high

Philip O’Sullivan of Investec
Philip O’Sullivan of Investec

Colm Kelpie

The rate of job creation in the services sector has surged to a five-month high.

Stronger economic conditions supported a rise in activity last month, and companies are also optimistic that activity will continue to rise over the coming year.

That's according to the latest Purchasing Managers' Index for the sector.

Philip O'Sullivan, economist with specialist bank Investec, said the latest report paints a positive picture for the sector.

"All in all, [the] release reveals a bright start to the second half of the year for the overall services sector," he said.

The headline seasonally adjusted business activity index rose to 58.3 in July, from 57.6 in June.

New business from abroad rose at the sharpest pace in four months. Panellists reported higher new orders from a range of markets including the UK, the US and other European countries. Companies were generally optimistic that activity will continue to rise over the coming 12 months.

More than 47pc of panellists forecast output growth, but sentiment dipped to the lowest since last November.

"We note that the forward-looking expectations index weakened to an eight-month low in July, although it is important to highlight that more than nine times as many firms expect growth in activity over the coming 12 months compared to those who foresee a decline," Mr O'Sullivan added.

"Looking at the sub-sector data, the main area that saw a dip in optimism was the travel & leisure component.

"It is possible that speculation around Ireland's future (post-Brexit) trading relationship with the UK could be slightly dampening the mood here, as that component is more reliant on UK business than the other parts of the industry that are captured by our survey," Mr O'Sullivan said.

Irish Independent

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