Saturday 21 April 2018

Services sector hits a seven-year high

Figures suggest the broader economy is picking up speed
Figures suggest the broader economy is picking up speed
Thomas Molloy

Thomas Molloy

THE country's dominant services sector grew in April at the fastest pace in seven years, suggesting the broader economy is picking up speed following a broadly based pick-up elsewhere in Europe.

"Respondents cited improving demand both domestically (some panellists mentioned signs of improvement in the housing market) and overseas," said Investec economist Philip O'Sullivan.

"On the latter, the new export business component expanded for a 33rd successive month in April, with the pace of growth improving to a three-month high."

Investec's monthly services purchasing managers' index for Ireland jumped to 61.9 in April from 60.7 in March as firms reported new business and a take-on of staff.

Rising input costs were one of the headwinds cited by respondents to the survey. Still, the business outstanding component showed the fastest rise in backlogs since March 2007 while the expectations component continued to portray a very confident outlook, with around 58pc of respondents forecasting a rise in activity over the next 12 months, against 4pc predicting a fall.

Eurozone business activity picked up at its fastest pace in almost three years at the start of the second quarter, other surveys found, while retail sales showed a surprise pick up in March.

The upbeat data will ease fears the euro zone could tip into deflation and could mute some voices calling for fresh policy action by the European Central Bank to spur growth.

Spain also grew at its fastest pace since before the financial crisis, suggesting a broad-based recovery is taking hold in the euro zone, although Germany continued to lead the upturn.

Services activity grew in all of France, Germany, Italy, Ireland and Spain for the first time since May 2011. In Germany, the Composite Purchasing Managers' Index pointed to second-quarter growth of 0.5pc.

It rose to 54.0 in April as expected from March's 53.1 – its 10th consecutive month above the 50 mark that divides growth from contraction.

New orders provided the boost, with the related sub-index rising to a 35-month high of 52.7 in April, while firms took on staff at the fastest pace since September 2011.

Irish Independent

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