Services growth fastest in 7 years

The Irish services sector recorded its fastest rate of growth in seven years last month with the number of firms looking to hire employees six times greater than those reducing their payroll.

The monthly Investec Services Purchasing Managers’ Index (PMI) for June increased from 61.7 to 62.6 — representing a 23rd month of expansion in the sector, with any value greater than 50 signalling growth in the industry.

Commenting on the data, Investec chief economist, Philip O’Sullivan said that a combination of foreign and domestic demand contributed to continued growth in the sector.

“Panellists reported further strength in new orders from both domestic and export clients, which helped extend the series of above-50 readings for the new business index into a 23rd month.

“Approximately 41% of respondents said that new orders rose during June, compared with 12% that posted a fall,” said Mr O’Sullivan.

The expansion is being seen across all areas of the industry with its four key components — business services; financial services; technology, media and telecommunications; and transport and leisure services — experiencing growth simultaneously for the 11th successive month.

The improvement in export levels recorded in the PMI data reflects a 5.3% year-on-year increase in total exports seen in figures released by the Central Statistics Office (CSO) yesterday.

Irish services firms also increased their staffing levels again last month — marking a 22nd monthly increase in employment in the industry.

Input prices are rising at the fastest rate since March 2011 however, with these increases being passed on in the form of higher prices.

These changes have not hampered companies’ profits though with the PMI profitability index posting a 12th increase in the past 13 months and reaching its highest level since May 2006.

Unsurprisingly, the outlook among the country’s services companies regarding the prospects for growth in activity over the coming year was strongly positive again last month.


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