Irish service sector grows at slowest rate in six months
A range of purchasing manufacturing indexes published across Europe and the US yesterday showed the growing gap between some of the world’s leading economies.
Ireland’s services sector grew at its slowest rate in six months in February, but business expectations indicate improved activity this year, a survey showed. Robust exports have eased growth and the Government expects the economy to expand by 1.5 per cent this year.
The NCB Purchasing Managers’ Index (PMI) of activity in the services sector, which accounts for roughly 60 per cent of the Irish economy, eased back to 53.6 from January’s five-year high of 56.8. However, the index remained above the 50 line that separates growth from contraction.
Growth in new export orders also eased after two months of expansion, with the sub-index pulling back to 56.7 from growth levels of 63.5 seen in January, the highest rate since the poll began in June 2002.
“There was a moderation in the pace of growth in exports during February. However, this must be considered in the context of January’s out-turn, which represented the fastest growth rate in the history of the series,” said NCB Stockbrokers chief economist Philip O’Sullivan.
Despite a struggling domestic economy with high unemployment and austerity, businesses forecast activity to be higher in 12 months’ time than current levels, with expectations gathering pace for the second successive month.
In Europe the divide between Germany and France, the euro zone’s two biggest economies, grew to its widest since the currency union’s inception in 1999.
“Two months into 2013 we’ve been somewhat disappointed with the euro zone economy’s progress. The PMIs again reaffirm that,” said Investec economist Victoria Clarke.
Markit’s Eurozone Composite PMI, a broad gauge of activity at thousands of companies across the 17-nation bloc, fell to 47.9 in February from 48.6 in January.
Euro zone retail sales for January also showed a 1.2 per cent rise, better than expected, although economists cautioned that the underlying picture was still very weak.
Britain’s services PMI, which accounts for the bulk of its economy, hit a five-month high of 51.8 last month from 51.5 in January.
Service industries in the US expanded in February at the fastest pace in a year, indicating executives of the biggest part of the economy were looking beyond the division in Washington over the nation’s budget. The Institute for Supply Management’s non-manufacturing index increased to 56 last month from 55.2 in January, the Tempe, Arizona-based group said. – (Additional reporting: agencies)