Purchasing Managers Index delivers mixed signals of decline in activity

The latest NCB Purchasing Managers Index has delivered mixed messages of a decline in activity but confidence there will be an increase the service sector within 12 months.

The PMI recorded that, after three months solid growth, the PMI for services activity decreased slightly during May, when it dipped below 50, signalling that activity in the service sector had shrunk.

The PMI for May was recorded as 48.9, down from 52.2 in April. The report noted that where activity fell, it was largely attributed to a stagnation of new orders and fragile client confidence. Sector data suggested that activity declined sharply in the financial services sector.

Despite the dip in activity, 44% of businesses surveyed forecast activity to be higher in 12 months’ time than current levels, compared with around 16% that predicted a fall. Optimism was due to an expectation of growth in export markets.

Even in May, when overall activity declined, new export orders increased. A number of those surveyed reported the Middle East had been a source of growth. Close to 22% of respondents noted an increase in new business from abroad, against 16% that posted a decrease.

The domestic market was not as encouraging and dragged the overall PMI into contraction. New business at services companies fell in May, after three months in which new orders had risen.