Services sector gains ground boosted by tourism
NEW research shows that the country’s services industry is continuing to gain ground, boosted by this summer’s good weather.
The latest Investec monthly Services Purchasing Managers Index, released this morning, shows a 13th successive month of growth and a pick-up in the pace of expansion.
The headline figure for August was 61.6 – anything over 50 indicates growth. It was a significant jump on July’s 57.6 reading, which itself was the sharpest rate of expansion in the sector in six years.
Two-thirds of the economy is driven by services.
“The latest Investec Services PMI provides a very encouraging update on operating conditions within the Irish services sector. It shows a very strong performance in August and according to respondents, the principal cause of rising activity in August was the spell of unusually good weather and the consequent boost to the tourism sector,” said Investec chief economist Philip O’Sullivan.
Sharp growth in new business was recorded, expanding at its fastest rate since March 2007. Those surveyed highlighted increased new business from both export and domestic markets. However input costs like raw materials and overheads also rose, dampening profitability.
Employment in services increased for the twelfth month in a row.
Investec said that, because of the short-term nature of the good weather, its expectations for the next twelve months had not changed – but that a positive trend was clear.
“Recent PMI readings have clearly been boosted by the relatively good weather during the summer. Expectations of activity in 12 months’ time, while quite positive, remained broadly unchanged during that period indicating the short term nature of the current strength. In saying that, with the headline index having improved for 13 consecutive months and service providers citing signs of improvement in economic conditions, the underlying trends are certainly positive” said Mr O’Sullivan.