PMI report shows fast pace of growth

The Irish services sector expanded at its fastest pace since August 2007, new statistics reveal.

According to the NCB Ireland Services Purchasing Managers (PMI) index, the headline PMI rate stood at 56.8 for January, up from 55.8 in December. New business growth remains “healthy”, with respondents to the report reporting an improvement from both domestic and external markets during January.

“We are encouraged to see that the rate of growth in new exports stands at the highest level since the series began in June 2002. These positive dynamics are encouraging employers in the services sector to take on more staff, with the employment index increasing at its fastest rate since Q1 2007,” Philip O'Sullivan, chief economist with NCB said.

While there has been a mis-match between output prices (falling) and input prices (rising) for the sector for some time, with output prices in negative territory since July 2008, January saw the slowest rate of decline since then, with the unadjusted data pointing to prices increasing in three of the four segments of the services sector during the month.

On the input side, costs rose at their fastest pace in three months during January, with respondents attributing this hike to increased taxation, energy costs and higher salary payments.

Looking ahead, Mr O’Sullivan said that he expects “the recent positive trends to continue over the coming months”.