The Irish service sector PMI (purchasing manager index) survey data ended 2014 on a positive footing. December saw faster increases in activity and new business, while staffing levels rose at the joint-fastest pace in the survey’s history. Meanwhile, reports of improving economic conditions and strong pipelines of new work contributed to optimism regarding the prospects for activity growth during 2015.
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The issue here is the extent of the rise and PMI surveys for both manufacturing and services have exaggerated the growth in actual activity - see more here.
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 for the second successive month to 62.6 in December, from 61.6 in November.
According to survey respondents, higher new business, as well as improvements in economic conditions and client confidence, had been behind the latest rise in activity.
Although dipping slightly from the previous month, sentiment among Irish service providers remained strong. Companies forecast further improvements in economic conditions and a number of respondents reported having good pipelines of new work heading into 2015.
Markit said that as was the case with activity, new business increased at a faster pace during the month. "The launch of new products had helped lead new orders to rise, with client demand reportedly improving. A sharp rise in new export orders was registered in December, with the UK, US and Middle East all mentioned as sources of new business."
Outstanding business continued to increase, although the rate of accumulation eased for the third consecutive month and was the slowest since February.
The rate of job creation was the joint-fastest in the series history in December, equalling that seen in the first month of the survey in May 2000. Panellists reported having taken on extra staff in response to higher new business and positive expectations for the future.
Input prices continued to increase at a solid pace, reflecting higher wage costs. This was despite reports from some panellists of lower fuel prices. An increase in output prices was recorded in December, extending the current sequence of inflation to nine months. "That said, the latest rise was only slight and the weakest since May. While strengthening client demand had enabled some companies to raise their charges, others reported ongoing competitive pressures," according to Markit.