Investec Services PMI Ireland February 2018

05 Mar 2018

The latest Investec Services PMI Ireland report shows that growth of services activity was sustained in February, thereby extending the current period of expansion to 67 months.  

The latest Investec Services PMI Ireland report shows that growth of services activity was sustained in February, thereby extending the current period of expansion to 67 months. Although sharp, the pace of increase implied by the headline PMI (57.2, versus January’s 59.8) has softened to the weakest since last November.
 
The New Business component was little changed in February, pointing to a substantial pace of expansion. Panellists reported new business wins from both domestic and export markets. On the latter, around one-in-five respondents signalled higher new export orders, with the US and Europe cited as areas of strength.
 
Ongoing increases in client demand produced another rise in Business Outstanding, the fifty-seventh in as many months. This was in spite of another rise in sector employment (which took the sequence of growth here to five-and-a-half years).
 
On the margin side, while the rate of Input Cost inflation eased to a five month low, it was still elevated in the context of historical survey data. Panellists blamed salaries, insurance and fuel costs for the latest inflationary pressures. In response to this, Irish services companies put through further increases in Average Prices Charged, which helped to keep the Profitability index in positive territory for a 16th successive survey period.
 
The forward-looking Business Activity: Expected Levels in 12 Months’ Time index shows that firms are very optimistic on the outlook, with February’s reading the highest since September. This optimism is broad-based, with all four of the segments of the services sector that are captured by this survey (Business Services, Financial Services, TMT and Travel & Leisure) simultaneously above 50 for a 69th successive month in February. Given the improving global economic backdrop, we think that this optimism is well-placed.
 
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