Activity growth picks up in services sector despite decline in new orders
According to the latest NCB Stockbrokers Services PMI (purchasing managers’ index), general activity picked up — after marginal growth in May — due to a range of new services and products being offered by respondent companies.
Despite this, however, the actual rate of new orders from customers declined during June for the second month in a row; mainly because of ongoing poor client confidence.
An increase in export orders, however, boosted the overall activity index from 50.5 points to 52.4 points.
The continued rise in new export orders has been “an important driver of Ireland’s export-driven economy, with services exports up by 8% — year-on-year — during the first quarter of this year,” according to NCB’s chief economist, Brian Devine.
The latest monthly services index is something of a contradiction. Services firms saw their profitability levels reduce — as well as sales suffer — last month and employment levels continued to fall (although a lot of this was driven by the failure to replace departing staff). However, confidence levels remain high in the sector.
Respondents said they remain confident that business activity will be higher in 12 months time that it is now, despite that level of optimism weakening slightly.
In terms of actual sub-sectors of the broader services pie, the latest data suggests that the financial services sector suffered most last month — the only area to register a decline in export orders, a greater fall in new business levels than elsewhere and the steepest decline in profitability levels. The largest fall in job numbers was seen, meanwhile, the in the area of business services.
On an overall basis, work backlogs decreased as new orders deteriorated; while there was another slight increase in input costs as some companies reported higher prices for fuel, raw materials and salaries.
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