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News : Irish Economy Last Updated: Sep 5, 2013 - 9:56 AM


Irish Economy 2013: Services PMI back to 2007 level boosted by 'fake' exports
By Michael Hennigan, Finfacts founder and editor
Sep 4, 2013 - 7:12 AM

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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 operating capacity.

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 certainly positive.”

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