Irish services PMI rises in August
The latest Irish services PMI (purchasing manager's index) survey show improving economic conditions in Ireland continued to benefit the service sector in August, resulting in further sharp expansions of activity and new business. Companies responded by taking on extra staff at the fastest pace in three months. The CSO will publish the official services index for July on Friday — in the 12 months to June, the index was only up by 2.4%.
Markit reported today that the seasonally adjusted Business Activity Index — which is based on a single question asking respondents to report on the actual change in business activity at their companies compared to one month ago — dipped to 62.1 in August, down from 63.4 in July but still pointing to further strong growth of business activity as companies continued to take advantage of improving economic conditions.
Business sentiment ticked up slightly during the month and was above the series average. "Ongoing improvements in wider economic conditions were predicted to lead to higher new business and subsequent growth of activity. The rate of expansion in total new business eased in August, but remained strong amid a general improvement in business conditions. New orders have now risen in 37 successive months."
New export orders increased at a faster pace during the month, with the rate of growth the sharpest since January. The US and the UK were reportedly the main sources of expanding new business from abroad. "Further strong rises in new orders contributed to another increase in backlogs of work."
Outstanding business rose solidly during the month. The rate of job creation quickened for the second month running in August and was one of the fastest in the series history. Respondents indicated that they had taken on extra staff in response both to new order growth and in order to work through outstanding business. The rate of input price inflation slowed to a six-month low, but remained sharp amid reports of higher staff costs.
Some panellists indicated that the weakness of the euro against the US dollar and sterling had also contributed to inflationary pressure. Higher input prices and strong client demand led companies to raise their charges during August, but competitive pressures continued to limit pricing power. Output prices increased, but at a modest pace.
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