Business

Saturday 17 August 2019

Services growing but pace slows due to Brexit

Strong growth: Oliver Mangan, chief economist at lender AIB
Strong growth: Oliver Mangan, chief economist at lender AIB

Shawn Pogatchnik

Business activity in Ireland's services sector remains strong in contrast to the sharp contraction in manufacturing output, but even service industries are starting to feel the chill of Brexit and global trade tensions, according to a new report.

Yesterday's publication by AIB of the monthly services PMI - short for purchasing managers index - found that service providers in July registered a business activity score of 55. That is far above the 50 mark separating growth from contraction, but well below June's measure of 56.9.

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The report, compiled by data analyst IHS Markit, found that services growth was slowing in part because of the first decline in overseas sales since November 2016. "Firms commented that Brexit uncertainty had negatively affected customer demand," it said.

The report, based on data provided by 400 businesses nationwide, found that financial services firms were growing the fastest, while companies involved in transport, tourism and leisure saw their activity decline for the second time in three months.

Yesterday's figures for the services side of the Irish economy look exceptionally upbeat when compared with the equivalent measures for Irish manufacturers, which were published last week. The Irish manufacturing PMI fell narrowly into negative territory in June - its first time below 50 since 2013 - and accelerated this descent in July, to 48.7.

The composite output index, which was also published yesterday and combines Ireland's divergent services and manufacturing measures, fell from 54.4 in June to 51.8 in July, still in positive growth territory, but at the lowest level since May 2013.

"Overall, it appears that strong growth in the large services sector is helping the Irish economy to continue to expand at a good pace," said AIB chief economist Oliver Mangan.

Irish Independent

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