Service industry positive about an upturn

COMPANIES within Ireland’s service industries are optimistic about an upturn in their fortunes over the next 12 months, despite latest monthly data showing the ongoing rate of decline in the sector actually sped up during November.

The latest purchasing managers’ index (PMI) for the services sector – published by NCB Stockbrokers – shows the weakness of the overall economy led to an increased contraction in new business activity amongst firms, in November – such activity now having fallen every month since February of last year. The actual index, for last month, dropped from 47.4 to 46.8. Any reading below the neutral 50 point mark measures decline.

According to Brian Devine, economist at NCB: “Activity in the services sector continued to contract in November, with the index falling back on the month. New business orders fell back significantly, despite increased demand from abroad... Fragile domestic demand has been dealt a further blow by the flooding that has besieged certain areas of the country.”

Like the PMI for the manufacturing sector, earlier this week, last month saw decreases in both input and output charges amongst services firms. November also prompted an increase in the level of job cuts amongst relevant firms.

This, however, was chiefly down to companies choosing not to replace staff.

All the same, employment levels in the services sector have fallen in each month since March of last year and November’s survey featured around 28% of respondents saying they had lowered their staff levels last month.

On a brighter note, however, November’s survey also found that most respondents are optimistic of higher business activity levels by this time next year.