Source: Markit

Irish Services: 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 - - dropped to 52.9 in August, from 55.7. The reading signalled a fifth consecutive rise in business activity at Irish service providers, although the rate of expansion eased to the weakest since May. Where higher activity was recorded, respondents mentioned higher new orders from both domestic and external markets.

Panellists expect economic conditions to improve over the coming year, leading to strengthening client confidence and improved demand. Consequently, optimism regarding the future prospects for business activity was recorded for the sixteenth successive month, and remained elevated.

The rate of growth of new business accelerated during August, and was solid. Respondents noted stronger demand both at home and abroad, with increased marketing activities bearing fruit. New orders have increased in each month since April. New export business at Irish services companies also rose at a faster pace over the month as the current sequence of expansion extended to one year. According to respondents, new orders from abroad increased from both new and existing clients.

As projects reached completion, Irish service providers posted a further reduction in outstanding business in August. Backlogs have now decreased throughout the past three years.

Despite recent new business growth, workloads remained insufficient to lead to job creation in August. Employment fell for the thirtieth month running, and at a solid pace that was the fastest since May.

Input prices declined again in August, largely reflecting reduced salary payments. That said, the latest fall in costs was only modest, and weaker than that seen in July. Input prices have now decreased in each of the past twenty months. August data signalled a further marked decrease in output prices charged by Irish service providers, albeit at the slowest pace since September 2008. Where falling charges were reported, panellists mentioned intense competition and pressure from clients.

Commenting on the NCB Republic of Ireland Services PMI survey data, Brian Devine, economist at NCB Stockbrokers said: "Business activity in the services market expanded for the fifth consecutive month, albeit at a slower rate than in July. Staffing levels at Irish services companies fell again in August, as has been the case throughout the past two-and-a-half years. Moreover, the rate of job cuts accelerated to its fastest in three months. Despite this confidence continues to filter back into the sector, with the reading rising again in August. Confidence more generally in the economy has recovered from the lows of last year and the fall off in the savings rate from its 12% level is driving business in the services sector rather than any expansion in employment."

The NCB Republic of Ireland Services PMI (Purchasing Managers’ Index) is produced by Markit Economics. The report features original survey data collected from a representative panel of around 300 companies based in the Republic of Ireland services sector.