Irish Economy 2014: Further sharp rises in
activity and new business were recorded in February in the latest PMI
(purchasing managers' index) survey, despite rates of expansion easing. Higher
workloads encouraged service providers to take on extra staff at the strongest
pace since October 2006. Meanwhile, sentiment regarding future activity improved
to the highest in just over ten years. However, it's important to keep in
mind that the biggest services companies book big chunks of their global
revenues in Ireland that are unrelated to the local economy.
Irish Economy 2014: Jobless exports boom 2000-2013; What will change to 2020?
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 – pointed to a
further sharp increase in business activity at Irish services companies in
February, although fell to 57.5 from 61.5 to signal an easing in the rate of
expansion. Growth of activity has now been recorded in each of the past 19
months. Where activity increased, this was mainly linked to rising new orders
and improving economic conditions.
Business optimism strengthened to the highest in more than
ten years during February. Improving economic conditions, and an expectation
that this will continue over the coming year, was reportedly behind the
As was the case with activity, the rate of expansion in
new orders remained substantial despite easing from that seen in January.
Respondents indicated that a stronger economic environment had encouraged
clients to commit to new projects. New export orders increased for the
thirty-first consecutive month in February, with the rate of growth remaining
one of the strongest in the history of the series.
Higher new orders led to another rise in outstanding
business, although the rate of accumulation slowed markedly as an easing in new
order growth enabled companies to transfer some resources to work on existing
The rate of job creation quickened, and was the sharpest
since October 2006 as companies reported having to take on extra staff in line
with higher workloads.
According to panellists, rising salary payments was the
main factor leading input costs to increase in February. The rate of inflation
was broadly in line with those recorded in the previous two months.
Irish service providers left their output prices broadly
unchanged in February, following a marginal increase in January. Although
improving client sentiment had enabled some companies to raise their charges,
others reported that strong competition continued to limit pricing power.
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