Investec Services PMI Ireland June 2018
Like the Manufacturing PMI release on Monday, today’s Investec Services PMI Ireland report shows that the rate of growth in activity has improved to a five month high (in this case 59.5, up from May’s 59.3 reading).
The improvement was driven by stronger client demand, with the New Business index reversing almost all of the moderation seen in the previous month. This appears to have been mainly driven by domestic clients, as the rate of expansion in New Export Business cooled (albeit slightly) in June (although the UK and US were cited by some respondents as sources of new demand).
Irish Services companies responded to the increased demand by adding to headcounts at the fastest pace seen in 2018 so far, but despite these additional resources the sequence of growth in Outstanding Business extended into its 61st month in June.
On the margin side, there was another sharp rise in Input Costs in June, with higher energy, insurance and salary costs said by panellists to be behind this. Firms were, however, able to pass on at least some of this increase by upping Output Prices once again. Regardless, the Profitability index was little changed in the three months to end-June from May’s report, with the sequence of above-50 readings now stretching to 20 survey periods.
The forward looking Business Expectations index strengthened in June, pointing to greater optimism by services companies. Allied to the increase in Employment growth to the fastest pace in the year to date, it is clear that Irish services companies are upbeat on the prospects for the sector. Given the positive international backdrop, we share this optimism.
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