The Irish services sector posted a strong rebound in November having almost fallen into contraction the previous month, according to a survey commissioned by AIB.
The AIB Services Purchasing Managers Index (PMI) rose to 53.7 last month from October’s more than seven-year low of 50.6. Anything above 50 indicates that the sector is expanding.
AIB chief economist Oliver Mangan indicated that the November rebound suggested that the October fall "was an aberration and that the Irish services sector is continuing to perform strongly".
Weakening global activity and the growing risk of a no-deal Brexit had pushed business activity in the services sector to its lowest level since May 2013 in October. The October data also indicated that the rate of contraction of new export business was the joint fastest since July 2009 while the rate of job creation was little changed from August’s more than six-year low.
But November signalled a turnaround with activity growth particularly fast among financial service companies although there was growth across all four sectors. Panellists reported an increase in orders from customers in the US, UK and Latin America.
“The recovery in new export orders seen in October and November is particularly welcome as they had weakened a lot during the third quarter,” Mr Mangan said.
Job creation
Such growth encouraged job creation which rose to its fastest rate since June. That strong new order growth did, however, result in a sharper increase in backlogs during the month, an indication of growing capacity constraints in the sector.
Prices rose both on the input and output sides during the month in which business confidence improved to a five-month high.
“Overall then, this report indicates that the services sector of the Irish economy is in good shape, despite the challenges posed this year by Brexit uncertainty and weakening global growth,” Mr Mangan concluded.
The survey is compiled by IHS Markit from responses sent to a panel of about 400 service companies in sectors such as transport, information, finance, communication, insurance and property.
