Growth of business activity in the Irish service sector slowed in February 2015, but remained sharp. Meanwhile, faster increases in new orders and employment were recorded and optimism regarding the 12-month outlook improved. The rate of cost inflation picked up from that seen at the start of the year.
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 — posted 61.4 in February, down from 62.5 in January, but still signalled strong growth of activity. Improving business conditions and higher new orders contributed to the latest increase in activity.
Official data show that in 2014 there was a 4% rise in the non-financial service sector and no jobs were added in the ICT sector.
Business sentiment ticked up from the start of the year, with optimism the strongest in three months. Those panellists forecasting a rise in activity over the coming year pointed to expectations of further improvements in market conditions and growth of export business.
Markit said that the rate of growth in new business accelerated in February and was substantial. Respondents indicated that improved client confidence had helped them to secure new contracts. A slowdown in the rate of growth in new export orders was recorded, with the latest increase the weakest since May 2013.
Outstanding business has now increased in each of the past 21 months.
"The latest accumulation was solid, albeit slower than recorded at the start of the year. Higher new orders allied with work on the development of new projects led service providers to raise staffing levels again in February. Furthermore, the rate of job creation was sharp. Input prices rose at a faster pace in February. Panellists reported that higher staff costs and the weakness of the euro against sterling had led input prices to rise, outweighing a fall in fuel costs. Companies continued to raise their output prices in response to higher input costs.
However, the rate of inflation was only slight and weaker than recorded in the previous month. Charges have now increased in each of the past 11 months."