The recovery in the Irish services sector PMI (purchasing
managers' index) continued apace in July amid further strong growth of activity
and new business. In turn, this resulted in sharp increases in backlogs of work
and employment. Meanwhile, there were further signs of increasing inflationary
pressures. However, official data from the CSO (Central Statistics Office)
showed that the seasonally adjusted monthly services value index fell by 1.3% in
May 2014 when compared with April 2014 while, in the year to May 2014, there was
an increase of 3.3%. - - June data will be published today.
Ireland's biggest services
"exporters" are not real exporters - - Google, Microsoft and Facebook book big
chunks of their global revenues in Ireland (40%+, 25% and 50%) and the revenues
are rising at double-digit rates.
These are fake tax
avoidance related exports that reflect activities in many countries.
Irish Economy: Ireland's ephemeral services export boom
The CSO's monthly services
index has a panel of 2,100 firms compares with the PMI panel of 450 companies.
The response rates for the CSO's provisional results are
typically 49% in terms of the enterprises surveyed which represents 70% of the
value of total turnover. The corresponding figures for the final results are 59%
and 88% respectively. PMI response rates are not disclosed.
Markit says 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 slightly to 61.3 in July from 62.6 in June, but still signalled a
sharp expansion in business activity. Improving economic conditions helped lead
to new order growth, while a recent spell of hot weather had also supported the
rise in activity in some cases.
Business confidence improved in July and was the strongest
since February. Optimism surrounding the Irish economy was expected to lead to
higher new business levels, and subsequent growth in activity.
New business increased in July, as has now been the case
in each month throughout the past two years. Greater consumer sentiment had been
the main reason for higher new orders, according to respondents, while there
were also reports that recent hot weather had helped the tourism sector.
New business from abroad increased again, with the rate of
expansion quickening marginally from the previous month.
The rate of accumulation of backlogs of work picked up in
July and was substantial. Panellists mainly linked the latest rise to increased
Higher new orders also contributed to increased staffing
levels, with employment growth recorded for the twenty-third month running. Some
respondents indicated that staff had been taken on in order to work on upcoming
The rate of input cost inflation quickened for the fourth
month running in July and was the strongest since September 2008. Higher salary
payments was the principal cause of the latest increase in input prices, while
the strength of sterling against the euro was also mentioned.
Output prices rose as companies passed on higher input
costs to clients. Charges have now increased in each of the past four months,
with the latest solid rise the sharpest since March 2007.