05 Apr 2018

Investec Services PMI Ireland March 2018

The latest Investec Services PMI Ireland report shows that while business activity continued to rise sharply during March, the rate of expansion has eased to a four-month low, partly as a result of snow disruption at the start of the month.

The headline PMI was 56.5 versus February’s 57.2 reading.


The report shows that, notwithstanding the weather-related disruptions, the rate of growth in New Business was little changed last month. Unsurprisingly, this outturn seems to have been driven by overseas customers, with the pace of expansion in New Export Orders quickening to the fastest in 2018. In turn, this strong demand led to a sharp increase in Backlogs of Work (where the sequence of growth now stretches to 58 months), despite another uptick in Employment (continuing a 67 month series of above-50 readings).


On the margin side, despite the rate of growth in Input Costs having moderated to a six month low, it remains pronounced, with higher prices for raw materials and rising wages credited with the latest increase. Companies are responding to this by upping Output Prices (as they have consistently done on a monthly basis throughout the past four years), but despite this the Profitability Index tumbled to a four month low in March.


The forward-looking Confidence index slipped to a four month low last month, although we would caution against reading too much into this given that it may have been influenced by the since-departed weather issues. We are nonetheless pleased to see the breadth of optimism across the sector, with all four of the segments that are captured by this release (TMT, Financial Services, Business Services and Transport & Leisure) simultaneously posting above-50 readings in this index for a 70th successive month in March.


Taken together with the Investec Manufacturing PMI report from earlier this week, the narrative appears to be one of a slight moderation in growth across much of the private sector in Q1 2018. However, given the favourable economic backdrop we would expect to see a pick-up in activity as the year progresses.


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