The Irish service sector PMI (purchasing manager's index) survey shows further strong improvements in both activity and new business during November, helping employment growth to accelerate to the sharpest since September 2006. Business sentiment also improved during the month. Meanwhile, higher salary payments are reported to have contributed to another solid increase in input prices, but the rate of output price inflation eased and was only slight.
We say reality warnings as the biggest service firms - such as Google Microsoft - book about 40% and 25% of their global revenues in Ireland for tax purposes while the broader-based official service activity index is more muted.
The idiot/ eejit's guide to distorted Irish national economic data
Markit reports 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 – ticked up slightly in November, posting 61.6, from 61.5 in October. Panellists linked the latest increase in activity to improving economic conditions and higher new orders.
Panellists generally expect ongoing improvements in economic conditions to help support further growth of activity during the next 12 months. Some panellists reported a strong pipeline of work heading into 2015. Optimism improved to the highest since February.
Service providers recorded another sharp increase in new business during November, with respondents indicating higher new orders from both domestic and export clients. The rate of growth ticked up marginally from that seen in October. Panellists linked the latest rise in new business from abroad to improving demand in key export markets, including the UK and US. The rate of expansion remained substantial, despite easing slightly over the month.
Outstanding business rose at a marked pace, extending the current period of accumulation to a year-and-a-half. The rise in backlogs was mainly linked to higher levels of new work.
The rate of job creation picked up to the strongest since September 2006, with the latest rise in employment one of the sharpest in the history of the survey. Staffing levels have now increased in each of the past 27 months.
Increases in wages and salaries contributed to another rise in input prices in November. The rate of cost inflation was broadly in line with that seen in October.
Companies raised their output prices at a slower pace during the month. The rate of charge inflation was modest, and the slowest since May. Some panellists raised their selling prices in response to higher input costs, but others offered discounts as part of attempts to secure new business.