Business boost for services sector

SERVICES companies reported an increase in new business last month, notably from domestic clients, but job cuts in the sector continued.

New figures show the expansion of Ireland’s services sector slowed in August, but companies still remained confident about future prospects. The rate of job cuts accelerated to its fastest level in three months.

The NCB services Purchasing Managers’ Index (PMI) fell to 52.9 from 55.7 in July, when the sector saw the fastest rate of expansion since late 2007. Any figure over 50 signals growth. The survey measures activity at companies such as hotels and banks.

NCB economist Brian Devine said: “The rate of growth of new business accelerated during August, and was solid. Respondents noted stronger demand both at home and abroad, with increased marketing activities bearing fruit. New orders have increased in each month since April.”

The index measuring business confidence rose to 68.6 from 68.4 in July while the index measuring new business rose to 53.9 from 52.1 in the previous month.

Chief economist with Bloxham stockbrokers Alan McQuaid said: “Although the August PMI figure was still a decent number, it does fit in with the recent general underlying trend of a slowdown in the economic recovery process.”

The survey pointed out that there was a further decrease in output prices charged by Irish service providers last month, but at the slowest pace since September 2008.

Where falling charges were reported, panellists mentioned intense competition and pressure from clients, the survey said.

On the jobs front, the survey said that, despite recent new business growth, workloads remained insufficient to lead to job creation in August. Employment fell for the thirtieth month running, and at a solid pace that was the fastest since May.

In Europe figures showed yesterday that the pace of recovery in the sector barely changed in August from July. The Markit Eurozone Services Purchasing Managers’ Index, showed order books growing and companies hiring staff at a marginally faster rate in August.

The main index for activity in the service sector, which accounts for roughly two-thirds of the eurozone economy, rose to 55.9 in August from 55.8 in July, slightly higher than an earlier flash estimate of 55.6.

“The final PMI reading suggests that the service sector recovery held its ground in August, with growth of activity so far in the third quarter in line with that seen on average in the second quarter,” said Rob Dobson of survey compiler Markit.