Tuesday 21 August 2018

Signs that Irish and euro-area growth slowed

Photo: iStock
Photo: iStock

Colm Kelpie & Reuters

Growth in Ireland's services sector has eased to its slowest since November. It is the second month in a row that expansion in the sector has softened.

But business confidence was at a five-month high, with 51pc of panellists predicting a rise in activity over the coming year, according to the latest Purchasing Managers' Index for the sector.

For the euro area, IHS Markit's composite PMI also showed a loss in growth momentum in February.

Philip O'Sullivan, economist with specialist bank Investec, which publishes the Irish data, said of Ireland's business confidence: results: "This optimism is broad-based, with all four of the segments of the services sector that are captured by this survey simultaneously above 50 for a 69th successive month in February.

"Given the improving global economic backdrop, we think that this optimism is well-placed," Mr O'Sullivan, said.

The headline seasonally adjusted Business Activity Index dipped to 57.2 in February from 59.8 in January.

New orders continued to rise sharply at service providers, with the rate of growth only slightly weaker than seen in January.

Stronger demand from customers in Europe and the US helped boost export orders. But the expansion was the slowest since December 2016.

Investec said rises in staff costs alongside higher prices for insurance and fuel led to another substantial monthly increase in input costs, albeit one that was the weakest since September last year.

Services businesses in the UK perked up in February after the weakest start to the year in almost a decade, according to a survey that reinforced bets that the Bank of England will raise interest rates again in May. Britain looks on track to sustain the same growth rate as late 2017, helped by strong global growth, economists said.

But headwinds persist from weak consumer spending and investor caution before Britain quits the EU in March 2019.

Irish Independent

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