Irish services sector records six-year high growth

Ireland’s services sector experienced its sharpest rate of expansion in six years, buoyed by the summer heatwave, according to Investec’s monthly Service Purchasing Managers Index (PMI).
 
Last month’s measurement reached 57.6 – anything over 50 indicates growth within the services sector. July was the twelfth successive month of expansion but, compared to June’s headline figure of 54.9, it was the fastest rate of growth since April 2007.
 
The PMI report is made up from a panel of 600 Irish private sector service companies, divided into numerous sub-categories.
 
Impressive growth in tourism and leisure helped to underpin gains due to this summer’s heatwave, although financial services contracted.
 
Philip O’Sullivan, chief economist for Investec, said: "The latest Investec Services PMI provides a very encouraging update on operating conditions in the Irish services sector.
 
"Respondents cited the recent heat wave in Ireland as a factor behind the latest improvement. This is borne out by unadjusted data for the four sub-sectors represented in the Services PMI showing that the travel, transport, tourism and leisure sub-sector experienced its fastest increase in activity since June 2011.
 
"The other sub-sectors had contrasting fortunes during July: the rate of growth in business services was marginally better, technology, media and telecoms (TMT) experienced a slowdown in growth and financial services contracted."
 
New business figures rose at their fastest rate in six years, while new export business expanded for a 24^th consecutive month in a row. Growth in new work was also at its strongest since March 2007. Business owners surveyed confirmed an influx of new clients, rather than existing ones, had helped to boost new order levels.
 
Meanwhile employment increased at its fastest pace since December 2006 and there was a marked rise in profitability; due in no small part to higher workloads.

"One of the highlights of last month’s release was the profitability component, which returned to positive territory for the first time in 66 months during June," added O’Sullivan.
 
"A further increase, albeit a very marginal one, was recorded in July as pressure on margins (input costs increased, output prices declined) was offset by higher volumes."


Image: Jim Nix

Last updated: 7th August 2013