Activity in services sector drops again

Business activity in the services sector fell for a third consecutive month in July, with the rate of decline accelerating, according to latest data.

That said, the latest edition of the monthly Services PMI (purchasing managers’ index) from NCB Stockbrokers, claims last month’s fall in activity was “only marginal”, with the overall level of positive sentiment among companies stronger than that seen in June.

“Companies expect activity to increase over the coming year, amid improving economic conditions, as well as new products and marketing strategies. The level of positive sentiment was slightly stronger than seen in June, but weaker than the series average,” NCB noted.

July’s services index also recorded the third straight month of job cuts in the sector, and while losses were described as “modest”, the latest fall in employment accelerated to the sharpest rate since February.

However, the area of business services was the only one in the broader services industry to register a decline in employment in July.

Profitability across the services industry fell again, being described as “substantial” but at a slower rate than the previous month.

One real positive from the latest survey, however, was a marked growth in new export business — with services companies reporting the 12th successive increase in this regard in July.

Last month’s growth also marked the fastest since February of last year.

“Respondents suggested that non-eurozone markets had been the main source of growth, with the UK and Australia mentioned,” NCB said.

The overall services index for last month measured 49.1 points, down from 49.7 for June. Its results were in contrast to that of NCB’s manufacturing sector PMI, published on Wednesday, which was well above the neutral 50-point mark and showed that sector in Ireland hitting a 15-month high, outperforming the rest of the eurozone.