Growth in Ireland’s services sector ticked up in July, a survey showed on Thursday, with strong growth in new orders suggesting momentum in the EU’s fastest-growing economy continued into the third quarter.
The Investec Services Purchasing Managers' Index (PMI) rose to 58.3 in July from 57.6 in June, when it had slipped to a seven-month low but still remained far above the 50 mark that separates growth from contraction.
The sector last fell below that mark in June 2012, when Ireland was halfway through a three-year bailout. Like the wider economy, services firms have so far proved very resilient to neighbouring Britain's decision to leave the European Union.
The further expansion in July was driven by a faster pace of growth in new business, where the sub-index rebounded back above the 60 mark to 60.4 last month from 57.9 in June.
"Even more encouragingly, the new export orders component reveals broad growth in demand, with respondents reporting higher new orders from a range of markets including the UK, US and Continental Europe," Investec Ireland chief economist Philip O'Sullivan said.
“Services firms have been responding to this by hiring more staff. Indeed, some panellists reported that they are training new staff in line with anticipations of further increases in workloads.”
O’Sullivan said that while more than nine times as many firms expect activity to grow over the coming year versus those who foresee a decline, the survey showed that expectations among companies weakened to an eight-month low in July, particularly among travel and leisure operators.
“It is possible that speculation around Ireland’s future (post-Brexit) trading relationship with the UK could be slightly dampening the mood here, as that component is more reliant on UK business than the other parts of the industry,” O’Sullivan said.
The number of visitors from Britain fell by 6 percent year-on-year in the first six months of 2017, data showed last week, but the weakness in Ireland’s main tourism market has so far been more than offset by growth elsewhere.
-(Reuters)
