Irish Economy 2013: The service sector
gained further momentum in August, with services PMI (purchasing managers'
index) back to the 2007 level boosted by what we term 'fake' exports.
The biggest services exporters are companies such
as Microsoft, Google, Apple and Facebook and their reported multi-billion valued
Irish-booked sales and exports, mainly reflect diversions from most of the world
beyond the Americas, to Ireland for tax purposes, unrelated to activity in
Ireland. Finfacts was also an outlier in undermining fairytales during the
bubble. However, there is still a big audience for delusion.
SEE for example:
Microsoft tops Irish exporters' fantasy league; 37% rise in 2012
We report below on the data from Markit.
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 - - rose to 61.6 in August from 57.6 in
July, signalling a third successive acceleration in the
rate of growth to the strongest since February 2007.
The ongoing signs of improvement in economic
conditions, allied with an unusually good spell of
weather, had contributed to the latest rise in activity.
Markit said companies generally expect further improvements
in economic conditions over the coming year,
leading to growth of activity. Sentiment regarding the
12-month outlook remained positive and was
broadly unchanged from that seen in July.
Sharp growth of new business was recorded, with
the rate of expansion the fastest since March 2007.
New orders have now risen in each of the past 13
months. Respondents highlighted increased new
business from both domestic and export markets.
Meanwhile, new business from abroad rose for the
twenty-fifth successive month during August and at
an accelerated pace.
Outstanding business increased for the third
consecutive month in August, and at a solid pace.
Respondents indicated that sharp growth of new
business had led to increasing pressure on
As has been the case throughout the past year, Irish
services companies increased employment during
the month. According to respondents, staffing levels
were raised in line with greater workloads. Despite
slowing from July, the rate of job creation in August
was still marked.
The rate of input cost inflation picked up to a six month high, with
increased salary payments
mentioned by a number of firms. However, the rate
of inflation remained relatively muted.
Conversely, output prices continued to decrease
amid strong competitive pressures and efforts to
attract and retain clients. That said, the pace of
reduction was only modest.
Philip O’Sullivan, Investec Ireland, said: “The strength in August was
broad-based with all
four subsectors reporting growth in business activity
on an unadjusted basis. New Business was very
robust, with both domestic and overseas markets
reported to be strong. In relation to the latter, the
New Export Business component was above 50 for
the 25th successive month. Higher new orders was
the key factor behind the increase in Employment,
which has expanded every month since August
2012 (albeit at a slightly slower pace in August).
“Recent PMI readings have clearly been boosted by
the relatively good weather during the summer.
Expectations of activity in 12 months’ time, while
quite positive, remained broadly unchanged during
that period indicating the short term nature of the
current strength. In saying that, with the headline
index having improved for 13 consecutive months
and service providers citing signs of improvement in
economic conditions, the underlying trends are
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