Brexit is already having a negative effect on employment with services companies reporting the weakest payroll expansion since May 2013, according to figures released from AIB.
The Ireland Services Purchasing Managers' Index (PMI) showed a bleaker picture in August as business activity growth eased to its slowest rate since January.
Uncertainty over the nature of the UK’s departure from the European Union has negatively affected orders from the UK and, as a result, inflows of new business expanded at the slowest pace in four months.
But the fact that payroll expansion was as weak as it was is a concern given that the State’s jobless rate hovers around 5.2 per cent. While job creation was solid in the services industry, despite easing to a 75-month low, the financial services sector posted the strongest expansion in staffing levels.
With the headline index reading dipping to 54.6 – from 55 in July – AIB chief economist Oliver Mangan said that pointed to a "slower pace in the Irish economy in 2019". However, given that the headline reading is above the US and euro zone, the economy is "continuing to outperform in terms of growth", he said.
Underpinning the slower rise in business activity was a weakening of overall new order growth in August which was the slowest rate since April. Yet volumes of new work from abroad rose in August, reversing the decline seen in July.
Nevertheless, business confidence dropped sharply from July to the lowest level since December 2011 “ as Brexit weighed on the outlook”, Mr Mangan said.
A third of panellists surveyed for the PMI, carried out by IHS Markit, were confident of a rise in business activity in 12 months’ time, but 13 per cent predicted a fall.