Growth in services stays strong despite slowdown in job creation
Latest Investec Purchasing Managers’ Index of activity moderates slightly to 61.7 in May
Business activity in Ireland’s services sector continues to expand at a strong pace despite a marked slowdown in new export business and job creation.
The latest Investec Purchasing Managers’ index for the services sector here remained near a multi-year of 61.7 in May, marginally down on the 61.9 recorded the previous month, but well above the 50 mark, which denotes expansion.
The services sector, which ranges from hotels and hairdressers to IT firms and telecoms, accounts for about 70 per cent of the economy’s output.
It has now recorded growth for 21 consecutive months.
The new business component posted growth for a 22nd successive month, with unadjusted data showing that each of the four sub-sectors covered by the survey - business services, financial services, TMT and transport & leisure - simultaneously recorded above-50 readings for a tenth consecutive month.
While the rate of growth in the new export business component slowed to an eight month low, growth remained robust and there were some encouraging signs from the UK and certain Asian markets, the survey said.
The rate of job creation remained sharp, despite easing to its weakest level since November last year.
Irish services companies have now added to their headcounts in each of the past 21 months.
“All in all, while most components in today’s report point to a moderation in the rate of expansion, we would not be particularly concerned given that the white-hot rate of growth recorded in the sector during April - the fastest since February 2007 - was unlikely to be maintained for long,” Investec’s Philip O’Sullivan said.